Bank South Pacific Ltd v Serowa [2016] PGSC 12; SC1496 (22 April 2016)

SC1496

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 40 OF 2013

BETWEEN:

BANK SOUTH PACIFIC LIMITED
Appellant

AND:
THOMAS SEROWA
First Respondent

AND:

T SEROWA LIMITED
Second Respondent

Waigani: Higgins, J
2016: 9th March & 22nd April

PRACTICE – Taxing Officer – Bill of Costs – Scope of costs order – work done incidental to judgment – includes enforcement – litigant in person – scope of entitlement – includes remuneration – Order 22 Rule 24 Supreme Court Rules.

Cases Cited:

Atlas v. Kalyk [2001] NSW CA 10
Australian Coal & Shale Employees' Federation v. Commonwealth (1953) 94CLR 621
Bateman v. Cookeson [1998] WASC 348
Bennett v. Macphillamcy Cummins & Gibson (1993) 117 ACTR 1
Bennett v. MC & G (supra)
Cachia v. Haynes ( 1994) 179 CLR 403
Carrigan v. Administrative Appeals Tribunal & others [2013] FMCA 197
Cotie v. Cox [2006] NSWSC 859

Hewitt v. Queensland Newspapers Ltd [1996] ACTSC 78 [3] – [5]
Karingu v. PNG Law Society [2001] PGSC 10
London Scottish Benefit Society v. Chorley (1884) 13QBD 872
Marko v. National & General Insurance Company Limited [1996]
ACTSC 41
Step v. Northern Territory of Australia [2007] NTCA 6
Wolseley v. Associated Newspapers Ltd (1934) 150 L.T. 347 @ 348

Counsel:

Peri Koeya, for the Appellant
Thomas Serowa, In Person

JUDGMENT

22 April, 2016

1. HIGGINS, J: This is an application by the appellant to review the taxation of a Bill of Costs presented by the respondents in relation to an order made on 20 May 2015 entering judgment for the respondents against the appellant in the sum of K81, 963.46 plus interest thereon and costs.
   
2. The judgment was satisfied on 5 August 2015. On 2 September 2015, the respondents filed a Bill of Costs. It claimed K212, 546.08. On 29 January 2016, after Notice of Objection was filed by the appellant, the Bill was taxed and allowed at K37, 639.70.
   
3. The appellant seeks to have the Certificate reviewed on the ground that costs incurred after 20 May 2015, items 6 – 39, are not allowable as incidental to the judgment of 20 May 2015.
   
4. Those costs relate to an application to enforce the judgment by garnishee proceedings against the appellant as well as preparation of contempt proceedings for failure to comply with the order for judgment. The latter items were disallowed but the items relating to garnishee proceedings were allowed albeit not in the amounts claimed. As the judgment was unsatisfied between 20 May 2015 and 5 August 2015, the taking out of garnishee proceedings could not be said to be unreasonable.
   
5. However, the question is whether those costs are embraced by the order of 20 May 2015. That turns on whether they are "incidental" to the proceedings and so embraced by the order.
   

5A. The word "incidental" is wide enough to include work that must reasonably and necessarily be done to enforce the judgment. The taxing officer accepted the garnishee proceedings but not the contempt proceedings as "reasonable and necessary" to give effect to the judgment.

6. Pronouncing final judgment does not conclude the work to be done in the matter in question. The order for judgment must be taken out and served on the parties against whom it has been pronounced. Further, the Bill of Costs itself must be drawn, settled, filed and served. An appointment for taxation must be obtained, notice of objection perused and considered and, of course, attendance upon the taxing officer. The Certificate of Taxation must be taken out and, if not satisfied within a reasonable time, enforced as a judgment of the Court.
   
7. The general approach to taxation of bills of costs, where such costs have been ordered was considered by me in Bennett v. Macphillamcy Cummins & Gibson (1993) 117 ACTR 1. The basic test is whether the service detailed was "necessary and proper". Considerable weight is to be given to the exercise of discretion by the taxing officer. (see Australian Coal & Shale Employees' Federation v. Commonwealth (1953) 94CLR 621; Bateman v. Cookeson [1998] WASC 348 per Parker J.)
   
8. It is to be noted also that the general rule is that a costs order carries interest from date of judgment not only until taxation but thereafter until payment. (see Hewitt v. Queensland Newspapers Ltd [1996] ACTSC 78 [3] – [5]).
   
9. To some extent, this favours the contention that costs incurred after judgment is pronounced should not be allowed on a taxation of costs ordered to be paid in consequence of that judgment but that is not conclusive.
   
10. I also note the comment of Latham J in Cotie v. Cox [2006] NSWSC 859, that, ordinarily, costs incurred after judgment has been delivered are not to be allowed because after final judgment "[33] some finality in the disposition of the proceedings has been assumed."
    
11. However, that comment related to an application after judgment to correct a failure to request an order for costs on the entry of judgment upon a cross-claim between defendants. It did not address the scope of an order for costs to embrace work performed after judgment is delivered in consequence of that judgment.
    
12. The answer is provided by Scrutton LJ in Wolseley v. Associated Newspapers Ltd (1934) 150 L.T. 347 @ 348 with respect to costs recoverable after payment into Court is accepted:
    

"If after the time for payment into Court the plaintiff incurs certain expenses in taking the money out, is it to be supposed he cannot obtain those costs from the defendant? I am told the taxing Masters take the view that though the taking of the money out of Court is after the payment into Court, the person taking the money out should be allowed those costs as being, I suppose, incidental to the payment into Court."

13. By analogy, a plaintiff granted judgment with costs should be allowed those costs incurred after the date of judgment which are reasonably and necessarily incurred to obtain the fruits of that judgment.
    
14. If, therefore, the defendant, being ordered to pay a sum of money, either by way of the verdict or the order for costs, subject, of course, to appeal, neglects to do so, the taking of proceedings which are reasonable and necessary for enforcement of payment may be included in the costs as "incidental" to the original order for costs.
    
15. This accord with the general principle that costs are awarded to compensate the successful party for the expense of being put to the necessity of litigation. (see Cotie v. Cox (supra) [27] – [28]). It would be futile and unnecessarily complex if Bills of Costs had to be confined as suggested.
    
16. However, as costs are not awarded to punish an unsuccessful party, costs should not be allowed which are either excessive or unnecessary. (See Marko v. National & General Insurance Company Limited [1996] ACTSC 41 – Bennett v. MC & G (supra)).
    
17. The appellant also objects to the allowance for time spent upon progressing the proceedings by the first respondent, Mr. Serowa. Though not a lawyer, Mr. Serowa is a professional practicing accountant. His time has commercial value. Nevertheless, he is and was a litigant in person.
    
18. The costs recoverable by a litigant in person pursuant to an order for costs has been the subject of litigation both in Australia and Papua New Guinea.
    
19. For Australia, the position is settled by the High Court of Australia in Cachia v. Haynes (1994) 179 CLR 403.
    
20. In that case, the successful litigant in person sought remuneration for his time at $85 per hour, his rate as a consulting engineer. That claim was disallowed. The Rules in New South Wales covered only the remuneration of a legal practitioner or a person employed by a legal practitioner.
    
21. There is an anomalous exception related to a lawyer as a litigant in person (London Scottish Benefit Society v. Chorley (1884) 13QBD 872).
    
22. In the UK, legislation was passed in 1975, Litigants in Person (Costs and Expenses) Act 1975, to enable a litigant in person to obtain costs as if represented by a solicitor but not exceeding two-thirds of the sum that would have been allowed to a solicitor.
    
23. The exception and the general rule were each affirmed in Atlas v. Kalyk [2001] NSW CA 10. In Step v. Northern Territory of Australia [2007] NTCA 6, the principle was affirmed that a litigant in person may only be compensated for out of pocket expenses. In Carrigan v. Administrative Appeals Tribunal & others [2013] FMCA 197, travelling expenses to attend hearings were disallowed to a litigant in person. Those cases related to litigants in person who were not lawyers.
    
24. I note the case of Karingu v. PNG Law Society [2001] PGSC 10 per Kandakasi J.
    
25. Mr. Karingu was a lawyer. He prosecuted in person a matter concerning his application for a practicing certificate. He was successful and was given the benefit of a costs order. That entitled him to recover, on taxation, reasonable party and party costs.
    
26. The relevant Rule (Order 22 Rule 24) provides:
    

"24 (2) 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."

26A. I note that the rule expressly refers to enforcing the rights of a party. It would not attain justice if a party was to be denied the costs of enforcing a judgment unless a further order for costs was obtained.

27. His Honour noted the traditional rule that a litigant in person who was a qualified lawyer could recover costs according to the scale. The corollary is that a non–lawyer could receive only out of pocket expenses.
    
28. The Litigants in Person (Costs and Expenses) Act was followed in the UK by the Civil Procedure Rules 1998 recommended by Lord Woolf which gave effect to the same provisions.
    
29. Having noted the alteration in the law in the United Kingdom, albeit by legislation, Kandakasi J went on to consider the impact of the Constitution, Schedule 2.2, 2.3 and 2.4.
    
30. Turning to the consideration of local circumstances, his Honour observed that, in PNG:
    
    • Legal fees were beyond the reach of many people.
    • Public Solicitors' offices are not adequately staffed and funded.
    • A legally represented party gets an award of full party and party costs but the unrepresented party has been recovering only disbursements.
    • That amounted to an inequality between litigants who are legally represented as opposed to those who are not.
      
31. His Honour considered the self-reliance demonstrated by a successful litigant in person should be recognised:
    

"Rather than rewarding these people for their efforts with appropriate orders for costs in their favour, the system has in fact penalised them in a way for not having engaged a lawyer by denying a recovery of their costs except for disbursements." (13/19)

32. The common law, as represented by Cachia v. Haynes (supra) should, his Honour considered, be varied in its application to PNG so that:
    

"...an order for costs in a litigant in person case includes the litigant in person's costs necessarily and reasonably incurred for the attainment of justice, unless the court otherwise orders. That should be the case whether or not the litigant in person is a lawyer provided there is no dual gain."

33. His Honour, it seems to me, is allowing some limitations on a litigant in person's claim for costs. Firstly, it should not exceed the costs allowable to a lawyer representing a party. Secondly, there is scope to reduce costs payable if costs are inflated by reason of the litigant's inexperience or lack of skill. Thirdly, the hourly rate to be awarded should not exceed the sum lost by reference to the litigant's usual remuneration but not so as to exceed the amount that would be allowed to a lawyer.
    
34. That qualification is necessary to ensure that a legally represented litigant who is not successful is no worse off than if the opponent was legally represented or, more relevantly, was a lawyer representing himself or herself.
    
35. Of course, his Honour's decision is, strictly speaking, obiter dictum. Mr. Karingu was a lawyer and so covered by the well-established though anomalous exception to the rule that a litigant in person may recover only out of pocket expenses.
    
36. By way of contrast, Mr. Serowa, though a professional man is not a lawyer. I also note in Cachia v. Haynes (supra) whilst the majority adhered to the traditional rule, Toohey & Gaudron JJ dissented, adopting the view that necessary or proper costs included "remuneration" to compensate a litigant in person for the time spent in preparation for and prosecution of the litigation.
    
37. The majority in Cachia v Haynes did acknowledge the change wrought by the UK Act of 1975 (supra). At [24] they commented that enactment was "a straight forward approach to the problem".
    
38. If the choice is between disallowing the exception for lawyers acting for themselves or extending it to other litigants, it seems to me that the approach adopted by Kandakasi J, favouring the latter option is to be preferred in this jurisdiction for the reasons he has given. It remains a matter for the discretion of the taxing officer what rate or items to allow having regard to the requirement of fairness to the losing party as well as to the successful litigant in person. It may also be noted that the UK provision fixes the rate of remuneration of a litigant in person at no more than 2/3 of the amount to be allowed to a lawyer. Such costs should include the costs of taking out and enforcing the judgment.
    
39. It does not seem to me that the Taxing Officer treated Mr. Serowa more favourably than if he had been a lawyer representing himself.
    

40. I have reviewed the items challenged. It appears to me that the Taxing Officer has correctly applied the principles informing the taxation of costs. Whilst there may be some minor errors in the application of the Scale, they are too insubstantial to warrant the Court's intervention. Her exercise of discretion as to quantum should not be lightly interfered with, this is particularly so in relation to the adoption of a particular hourly rate.

41. I will hear the parties as to the costs of this application.
    

________________________________________________________

Lawyers for the Appellant: Kunai & Co Lawyers
First & Second Respondent: Thomas Serowa in Person