Gough Finance Ltd v Westpac Bank of Tonga [2005] TOLawRp 18; [2005] Tonga LR 302 (15 June 2005)

IN THE SUPREME COURT OF TONGA

Gough Finance Ltd

v

Westpac Bank of Tonga

Supreme Court, Nuku'alofa
Ford J
CV 684/03

18 and 24 May 2005; 15 June 2005

Costs – taxation of costs – overseas lawyers – not registered in Tonga – costs not recoverable

On 24 August 2004 the Court delivered judgment on an interlocutory issue, namely, whether the Supreme Court of Tonga had jurisdiction to hear the case (as claimed by the plaintiff) or whether the action should properly have been brought in New Zealand (as claimed by the defendant). The Court found for the plaintiff and held that Tonga was the appropriate forum. The Court also awarded costs to the plaintiff on that interlocutory application in a sum to be either agreed or taxed. On 20 September 2004 two bills of costs were filed on behalf of the plaintiff. The first bill from Mr Niu claimed costs of $4515.50 together with disbursements of $325.50. The second bill of costs was in the name of WJ Palmer, a Christchurch-based partner with Buddle Finlay, a New Zealand law firm. The "Buddle Finlay bill" claimed costs incurred by Mr Palmer and various other named "fee earners" in his Christchurch firm totalling NZ $11,182 together with disbursements of NZ $206. Defence counsel opposed both bills of costs and they were subsequently referred to the Court for taxation.

Held:

1. An overseas counsel was unable to claim costs on taxation unless, at the material time, he or she held a valid practising certificate. None of the Buddle Finlay "fee earners" held a practising certificate in Tonga.

2. The Buddle Finlay bill of costs was disallowed. The Court issued a taxation certificate in respect of Mr Niu's bill of costs, which would take account of the points made by both counsel in their written submissions.

Case considered:

Practice Direction 02/92

Statute considered:

Law Practitioners Act 1989

Rules considered:

Supreme Court Rules

Counsel for plaintiff: Mr Niu
Counsel for defendant: Mr Waalkens QC

Ruling

The Issue

The short point at issue in this ruling is whether costs incurred by the plaintiff's solicitors in Christchurch, New Zealand, in respect of an interlocutory argument are recoverable upon taxation in Tonga.

The Background

On 24 August 2004 I issued an earlier ruling rejecting an application by the defendant that challenged the jurisdiction of this Court to hear the substantive action. The defendant had contended that New Zealand was the appropriate forum but I ruled against it and held that the case would be heard in Tonga. I awarded costs on the application to the plaintiff.

The Cost Claims

On 20 September 2004 Mr Niu filed a bill of costs relating to his own attendances claiming $4,190.00 together with disbursements amounting to $325.50. On the same day he filed a separate bill of costs relating to attendances by members of Buddle Finlay, the Christchurch law firm acting for the plaintiff. The Buddle Finlay invoice was for costs of NZ $11,182.00 and disbursements of NZ $206.00. An additional figure is shown on the bill for New Zealand GST totalling $1397.75 but the GST element is not being claimed upon taxation.

The Buddle Finlay account involves attendances by eight "fee earners" whose names and hourly rates are set out on the cover page of the bill. Mr Niu refers to the eight fee earners in his submissions as New Zealand "counsel" but it is not known whether they are all qualified barristers and solicitors. Their charge out rates range from NZ$100 to $300. It would appear that the senior solicitor involved at the Buddle Finlay end was Mr WJ Palmer who signed the bill of costs. He is one of the solicitors on the $300 per hour charge out rate.

In summary, the plaintiff is claiming costs and disbursements on this taxation made up of T$4515.50 and NZ$11,388.00.

I am not familiar with recent costs awards in New Zealand but I can say at once that, in terms of this jurisdiction, the amount claimed is totally out of proportion to what I would be prepared to accept as a "reasonably necessary or proper" charge (to use the relevant wording from the costs provision Order 29, rule 4(i)(ii) of in the Supreme Court Rules) in respect of an interlocutory argument that did not even involve a Court hearing. My Ruling was decided on the basis of (admittedly helpful) written submissions on the law.

Submissions

At the taxation hearing, which was eventually held on 3 May 2005, after considering Mr Niu's bill of costs, I indicated that I would need to receive further submissions from counsel before determining whether all or any part of the Buddle Finlay bill of costs would be allowed. Those further submissions have now been received and considered.

In his submissions, Mr Niu referred to hourly rates that have been allowed in other cases upon taxation in Tonga involving New Zealand counsel. However, in the cases he referred to counsel held current practising certificates under the Law Practitioners Act 1989. Mr Niu also submitted that overall the Buddle Finlay costs were "reasonably necessary due to the complexity of the issue of jurisdiction which was raised."

In response, Mr Waalkens submitted that the plaintiff had not discharged the onus of proof that the costs being claimed in the Buddle Finlay account were either appropriate or reasonable and he submitted that they should be disallowed in their entirety.

On 3 June 2005, I issued a Minute drawing Counsels' attention to the provisions of the Law Practitioners Act 1989 and I invited them, if they so wished, to make any further supplementary submissions within seven days. No further submissions have been received.

Conclusions

My concern in this case is that s 10 of the Law Practitioners Act 1989 makes it an offence, punishable by up to two years imprisonment or a fine of $1000 or both, for any person to practise as a law practitioner without having in force a valid practising certificate. Section 3(2)(b) of the same Act provides that a person shall be deemed to practise as a law practitioner if he advises any person on any matter of law or legal procedure.

Practice Direction 02/92, which promulgated the guidelines for taxation in terms of Order 29 of the Supreme Court Rules provides (consistently with the provisions of section 10 of the Law Practitioners Act) that the fees allowed upon taxation are recoverable only in respect of the three classes of practitioners defined in that Practice Direction. The definitions then provide that all practitioners in the categories of "Locally qualified Lawyers" and "Counsel" must be licensed to practice law in the Kingdom. Likewise practitioners in the third category, namely "Senior Counsel", are also required in terms of the legislation to hold a valid practising certificate.

The position, therefore, is clear. An overseas counsel is unable to claim costs on taxation unless, at the material time, he holds a valid practising certificate.

None of the Buddle Finlay "fee earners" hold a practising certificate in this country and it seems to me that that, quite simply, must be the end of the matter. To allow the Buddle Finlay bill of costs would be to accept that the named fee earners were able to recover costs upon taxation for practising as law practitioners in connection with a case before this Court when none of them held a valid practising certificate. That situation is simply not permitted. This Court cannot even entertain an application which might appear to condone a breach of the Law Practitioners Act.

The Buddle Finlay bill of costs is, therefore, disallowed. I shall proceed to issue a taxation certificate in respect of Mr Niu's bill of costs, which will take into account the points made by both counsel in their written submissions.