Tupou v Saulala [2004] TOSC 50; CV 220 2001 & 272 2001 (17 November 2004)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

NO. CV. 220/2001 &
CV. 272/2001

CV 220/2001

BETWEEN:

TEVITA POASI TUPOU
Plaintiff

AND:

1. SANGSTER SAULALA
2. ANNA TUPOU
3. MASAO PAASI
Defendants

CV 272/2001

BETWEEN:

TEVITA POASI TUPOU
Plaintiff

AND:

1. SEMISI KAILAHI
2. SANGSTER SAULALA
3. OBN TELEVISION
Defendants

BEFORE THE HON MR JUSTICE FORD

Counsel: The Plaintiff in person and Mr Stanton (New South Wales Bar)
together with Mr W. Edwards for the defendants

Date of Chambers Hearing: 30 September 2004
Dates of written submissions: 13 October, 28 October and 5 November 2004
Date of Ruling: 17 November 2004

RULING ON COSTS

Background

In a judgment dated 21 July 2004, I upheld an application by the defendants to have these two cases tried by jury. The argument at the interlocutory hearing centred around the interpretation of clause 99 of the Constitution which sets out the entitlement of a party in a civil action to have the case tried by jury but there appeared to be other conflicting statutory provisions and the Court was told that the issue had never previously been judicially determined. The plaintiff had filed an application seeking an order denying the defendants the right to trial by jury and numerous affidavits had been filed on behalf of all parties.

At the conclusion of my judgment, I made an award of costs in favour of the successful defendants in a sum to either be agreed or taxed. Agreement did not prove possible, however, and the matter was then referred back to me for taxation of the defendants' bill of costs. This is my Ruling on that taxation.

Chambers Hearing

I conducted a taxation hearing in Chambers on 30 September 2004 in which I heard oral submissions on all aspects of the taxation exercise, in particular, the challenge by the plaintiff to the time spent by defence counsel on various attendances and other legal work. Mr Edwards appeared for the defendants and the plaintiff, a former Attorney General and Minister of Justice, appeared on his own behalf. Certain concessions were made by Mr Edwards in relation to particular items in the defendants' bill of costs but, whilst acknowledging them, the plaintiff made it clear that everything he said at that Chamber's Hearing was subject to his overriding contention that the defendants should not be able to claim against him costs and disbursements, over and above the maximum amounts provided for in the Tongan scale of charges, simply because of the fact that they had engaged overseas counsel.

I deferred giving a decision on taxation at that stage but I invited counsel to file written submissions on the appropriate hourly rate to be allowed for overseas counsel (Mr Stanton). I am obliged to both the plaintiff and Mr Stanton for the quality of the submissions subsequently produced.

Jurisdiction on taxation of costs

The starting point for any consideration of the jurisdiction to award costs in a civil proceeding is section 15 of the Supreme Court Act (CAP.10). Although, not perhaps as all embracing as its English counterpart (section 51 (1) of the (UK) Supreme Court Act 1981), the provision has been given a broad interpretation. In Secretary of Fisheries v Lavinia [1999] Tonga LR 179, the Court of Appeal referred to section 15 as setting out, "the fundamental principle that costs are in the discretion of the Court." In exercising that discretion the Court is then to be guided by Order 29 of the Supreme Court Rules 1991 -- in particular Order 29 Rule 4(1) and various Practice Directions that have been issued from time to time.

The provisions of Order 29 have been considered in a number of cases, perhaps the most prominent of which in recent times have been Polynesian Airlines v Kingdom of Tonga (unreported) C. 126/97, Finnigan J. (judgment dated 19 May 2000) and Lali Media Group Ltd anors v 'Utoikamanu (unreported) C.V. 124/2003, Ward C.J. (judgment dated 19 April 2004).

Order 29 R 4 (1) allows, "all such costs, charges and expenses as are reasonably necessary or proper for the attainment of justice or for maintaining or defending the rights of any party."

The Court of Appeal in Edwards v Kingdom of Tonga [1994] Tonga LR 62, 68, said:

"The use of the phrase "reasonably necessary or proper" means that a cost may be justified either as being reasonably necessary when it was incurred or that it was reasonably proper to incur it even though it may not in the event have been necessary. The test of reasonableness applies in both cases."

The status of the various Practice Directions that have been issued in relation to costs and disbursements was considered by Finnigan J. in the Polynesian Airline case. His Honour noted that, although they do not have the full force of a statute, Practice Directions are authoritative in that they are derived from the inherent jurisdiction of the Supreme Court to regulate and control its own process.

Practice Direction 02/92 set out a scale of charges which fixed the maximum fees allowable upon taxation, subject to a judge in any special case being able to increase the scale charges by such amount as he thinks fit. Hourly rates were first introduced in 1987 in an attempt to establish guidelines for the profession and consistency in taxation -- see O.G.Sanft & Sons & anor. v Johnson & ors. [1991] Tonga LR 1.

The scale charges in PD 02/1992 remained unchanged until earlier this year when former Chief Justice Ward, after consultation with the Law Society, drafted PD 05/2004. That Practice Direction was circulated 4 August 2004.

The only other relevant Practice Direction is PD 04/2003, which set out the maximum allowable limits on taxation for the various disbursements itemised. Practice Direction PD 04/2003 also reaffirmed the principle that time spent on legal research is not an allowable claim unless the law involved is novel or unusually complex.

Practice in other jurisdictions

In the Polynesian Airlines case, Finnigan J. compared the Tongan practice upon taxation with the approach taken in England and New Zealand. Whilst accepting that some guidance could be obtained from the English authorities prior to a rule change in 1986, His Honour concluded that the costing scheme in Tonga was closer to New Zealand practice than to English practice.

As noted by the Court of Appeal, however, in Edwards v Kingdom of Tonga [1994] Tonga LR 62, 68, the drafting of Order 29 Rule 4 (1) was clearly based upon the equivalent English rule, RSC Order 62 rule 28 (2), prior to 1986.

Whatever the historical position, and I have not heard argument on the matter, it appears that in recent years there have been significant changes to the costs regime in both England and New Zealand and little assistance, if any, can now be derived from reported decisions in those jurisdictions. In New Zealand, for example, as I understand it, changes made to the costs scheme in the High Court Rules as from 1 January 2000 mean that a successful party can now expect to recover two thirds of the costs found under the new scheme to be reasonable -- Glaister v Amalgamated Davies Ltd (C.A.) [2004] NZCA 10; [2004] 2 NZLR 606.

In England, the new procedural code prescribed in the CPR grants the Court a wide discretion as to whether costs should be awarded on a standard or an indemnity basis and the old Rules of the Supreme Court (RSC), upon which the equivalent Tongan rules were based, no longer have any relevance -- see Reid Minty v Taylor [2001] EWCA Civ 1723; [2002] 2 All ER 150.

Against that background, it seems to me that the regime in Tonga for dealing with costs and disbursements is now unique to this country. In considering the particular issues that arise for determination in the present case, therefore, I see no need to look beyond the principles that have been expounded in earlier decisions of this Court. In this regard, I find some comfort, in the fact that when, for the first time, a similar issue involving the allowance of a foreign counsel's costs came before the Court of Appeal in Vanuatu in May 2000, the Court, presided over by a senior New Zealand High Court Judge, adopted and relied upon the judgment of Martin C.J. in this Court in Uta'atu v Commodities Board (No. 2) [1990] Tonga LR 48 -- see Hurley v Law Council of the Republic of Vanuatu [2000] VUCA 10.

In Hurley's case the Court of Appeal, after referring to Uta'atu and Jordan v Edwards [1979] PNGLR 420, concluded:

"The underlying philosophy of those cases from Papua New Guinea and Tonga are appropriate here. 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."

Tongan authorities

In Uta'atu, Martin C.J. said:

"Overseas lawyers have high overheads by comparison with Tonga and cannot be expected to operate on Tongan rates. Their clients will have to pay overseas rates. If that client succeeds in Tonga and then fails to recover at least a substantial part of those costs any damages will be substantially reduced. He will have been denied justice because he had not been adequately compensated.

Justice means being fair to both parties, including the loser. That can be achieved by allowing rates only when local counsel could not have adequately dealt with a case. If they could, the luxury of overseas counsel must be paid for by the client; if they could not, the necessity of overseas counsel will be paid for by the loser."

In Tonga Development Bank v Niu (unreported) C. 231/92, judgment dated 6 November 1992, a dispute arose on taxation as to the sum charged by overseas counsel acting for the plaintiff. In his judgment, Ward C.J. said:

"The maximum fees laid down in the Practice Direction (PD 02/1992) are reasonable and sensible. They can never, however, be a hard and fast rule and, in cases of exceptional difficulty for example, it is always open to a lawyer to seek rates in excess of these figures. When counsel comes from overseas, the same general principles apply. He appears as a member of our legal profession and subject to the same rules as other members. That includes the rules as to costs. If he does not wish to be paid at those rates, he should not accept the instructions or should ensure he is properly covered by special arrangements with his lay clients. Cost rules are made to ensure fairness to both parties and it is clearly not fair to order costs against the losing party simply because his opponent has employed a lawyer who charges at a higher rate."

His Honour then added:

"Most cases before the Courts here do not require counsel from abroad but where such a course is necessary, charges outside the tariff may be appropriate. In such cases, application should be made to the judge in chambers for the case to be certified as meriting remuneration at rates in excess of the scale and/or requiring the attendance of counsel from overseas and/or requiring two lawyers. Such application should be made as soon as the need is apparent and failure to seek such certification may result in costs in excess of the scale being refused”.

In both Polynesian Airlines and the Lali Media cases it was accepted that it was reasonable and proper for overseas counsel to have been instructed. That was also the case in Taimi 'o Tonga- Ruling on Costs (unreported) No. C.V. 124/03 - C.V. 219/03, judgment dated 24 May 2004 (Ward C.J.) Indeed, in none of those cases did the proposition appear to be challenged. The former Chief Justice observed in the Lali Media and Taimi 'o Tonga cases that the issues in each were important and the number of lawyers in Tonga with sufficient experience was still (as at April/May 2004) "very limited".

The taxation exercise that I am concerned with in the present case, involves an interlocutory hearing only. Both sides elected to instruct senior counsel from abroad but no attempt was made to seek a prior certificate of approval from the Court. The respective parties, in other words, took the risk that, should they succeed, any application for costs in excess of the scale fees, would be refused. As it happened, the defendants were successful and they now seek a costs award in excess of the scale fees on account of the fact that they retained overseas senior counsel to act for them in the matter.

Defendants’ submissions

The principal grounds relied upon by the defendants for the need to engaged overseas counsel at a much higher hourly rate than the maximum figure allowed in Tonga can probably be summed up as follows:

1. The plaintiff himself had engaged overseas senior counsel -- indeed a Queen's Counsel from New Zealand.

2. The total amount claimed in the two defamation actions by way of general and aggravated damages is in excess of T.$1.8 million and the amount sought for costs and disbursements on the present interlocutory argument is "insignificant in comparison to the damages amount claimed."

3. To counter the plaintiff's "detailed analytical and complex arguments propounded in respect of a denial of the constitutional right to elect a jury trial" the defendants had little choice other than to seek experienced and skilled legal representation from abroad.

For these reasons, Mr Stanton sought an increase from T.$150 to T.$400 in the maximum charge out rate allowed upon taxation for senior counsel. Mr Stanton informed the Court that his usual and actual hourly rate as a senior counsel practising predominantly before the New South Wales Bar in Australia is AUD$400.

Plaintiff’s submissions

In response, the plaintiff made a number of relevant points but his principal submission was that this taxation exercise arose out of the interlocutory proceeding relating to whether the trials should be with or without a jury. It does not relate to the hearing of the substantive cases.

The plaintiff submitted that overseas counsel was not a necessary requirement for the interlocutory hearing and the employment of Mr Stanton was, in effect, a luxury for whose payment above scale he (the plaintiff) should not be responsible. In putting forward this submission, Mr Tupou adopted and relied upon the following statements by Ward C.J. in the Lali Media case:

"In unexceptional cases the need to instruct counsel from abroad cannot be considered reasonably necessary and neither, therefore, can his travel costs to Tonga"

and:

"The test (to be applied) is whether the charges are reasonably necessary for the attainment of justice or for defending the rights of (any party) in this case in Tonga."

The plaintiff referred to the New Zealand High Court Rules relating to costs and calculated that if the interlocutory proceeding in the present case had been heard in New Zealand and categorised as an ordinary proceeding in terms of the recognised Bands, then the costs allowed would be NZ.$2,320. If the proceeding could have been categorised as the most time-consuming and complex then the costs recoverable would be NZ $6,450.

The New Zealand Rules are not before me and in any event, as indicated earlier in this judgment, I do not see them as having any relevance to the situation that pertains to the costs regime in the Kingdom today. I, nevertheless, consider that there is significant force in the plaintiff's principal submission, namely, that the defendants' costs were incurred in respect of an interlocutory hearing only and not the trial of the substantive defamation claims.

Findings

I do not see either of the first two grounds relied upon by the defendant, as summarised above, being decisive in terms of the test that I am required to apply. It is true that the plaintiff instructed senior counsel from abroad to appear and act on the interlocutory matter but that does not necessarily mean that it was reasonably necessary or proper for the defendants to follow suit.

Commenting on such a situation in Jordan v Edwards [1979] PNGLR 420, Prentice C.J. observed:

"Another situation can arise, and no doubt has arisen, when a practitioner here, who was going to handle the case in court himself, is apprised that Mr Bigwig of Queen's Counsel will be appearing on the other side. So, he too briefs out. If he succeeds, then this is a factor to be taken into account, but surely not a decisive one. The fact that silk is briefed on one side does not mean that silk must be briefed on the other."

Likewise, the exercise carried out by defendants' counsel which showed that the costs now being claimed in respect of the interlocutory argument is only a very small fraction of the total damages claimed by the plaintiff is not a relevant factor in terms of the test which I have to apply. I repeat, the test under our rules relevant to the application before me is whether the charges are reasonably necessary or proper for the attainment of justice or for maintaining or defending the rights of the defendants.

The third ground advanced by the defendants is, of course, relevant and indeed it is central to the whole of their argument on taxation. Was the interlocutory hearing sufficiently complex to make it reasonably necessary or proper for the defendants to instruct overseas counsel? I am bound to say that I have not been persuaded that it was.

There is, in colloquial terms, a world of difference between an interlocutory hearing consisting of the straightforward presentation of legal submissions and the cut and thrust involved in conducting the trial of a major civil litigation case. There are experienced local counsel perfectly capable of presenting first-rate legal submissions in complex interlocutory hearings. Indeed, it would be a rare case today when this court could be persuaded that it was necessary or proper, in terms of the relevant test, for a litigant to have to instruct overseas counsel to appear and present submissions on an interlocutory argument no matter how complex the legal issues involved.

On the other hand, given the very limited availability in the Kingdom of counsel with expertise in major civil trial work, in defamation proceedings in particular, I can readily appreciate the need to have to instruct senior overseas counsel to conduct the substantive hearing in cases such as the present. As Martin C.J. recognised in the Sanft case (p.2) the "conduct of the trial itself requires intense concentration and instant decisions in often complex situations." I respectfully agree with those observations. Even more important perhaps is the need to have experienced senior counsel available to lead the evidence on behalf of the party he represents and handle the cross-examination of the opposing side's principal witnesses.

It appears that, initially at any rate, Mr Stanton was of the view that it might not be necessary to even have oral argument on the interlocutory issue in the present case. In a letter dated 5 September 2001 addressed to the Registrar of the court, he said:

"Would you kindly advise His Honour of the above (relating to fixture dates) in the event that he is still minded to require oral argument after he has read submissions from both sides."

The query raised by counsel for the defendants was entirely appropriate. As it turned out, it was the plaintiff who insisted upon oral argument.

In summary, I have concluded that it was not reasonably necessary or proper in terms of Order 29 Rule 4 (1) (II) for the defendants to retain overseas counsel and the only costs I am prepared to allow, therefore, are those recognised in the scale of charges prescribed in the relevant Practice Direction.

There is one concession, however, which I am prepared to allow the defendants. The hearing of the interlocutory argument took place on 7 July 2004. On 8 June 2004, as I have already noted, the former Chief Justice drafted a Practice Direction amending the scale of charges allowable on taxation. At that stage the rate had remained unchanged since 6 February 1992. It was intended that the new rate should take effect as from 8 June 2004 but through an administrative oversight on the part of court officials, circulation of the Practice Direction was overlooked. As soon as the oversight was discovered, the position was remedied but that was not until 4 August 2004 by which time the former Chief Justice who had drafted the new Practice Direction was no longer in Tonga. In the meantime, of course, the interlocutory hearing in this case had taken place.

In these circumstances, I consider it appropriate and just to allow costs to the defendants' two counsel at the rate set out in the new scale. That sees an increase in the hourly rate allowed to Mr Stanton, as senior counsel, from $150 to $210 and, in the case of Mr Edwards, as counsel, from $100 to $140.

Defendants’ Bill of Costs

I turn now to consider the defendants' bill of costs, which is the subject of this taxation. The total amount claimed is $24,138.97 made up of costs $17,983.00 and disbursements $6,155.97. The amount claimed, in my view, is clearly excessive bearing in mind that the interlocutory hearing itself ran for less than three hours. I have gone through the itemised account in detail. I will not complicate this Ruling unnecessarily by recording my conclusions in relation to each entry but I will attach a costs schedule to the Taxation Certificate and the parties will then be able to see precisely what costs and disbursements have been allowed on taxation.

In this Ruling, I simply propose to make some general observations about the overall costs claim:

1. As explained, I have adjusted Mr Stanton's hourly rate, as senior counsel, to $210 and Mr Edward's hourly rate, as counsel, to $140. I have disallowed completely Mr Stanton's travel, accommodation and telephone expenses.

2. The bill included a claim of $1200 for three hours spent by Mr Stanton receiving and perusing one of the affidavits filed on behalf of the plaintiff. The affidavit is described in the bill of costs as being "9 pages with 83 pages of annexures". When the affidavit is examined, however, it can be seen that it contains little information of any substance. The exhibits, which in fact appear to total 86 pages, comprise of 38 pages copied from Tonga newspapers and a copy of a six-page petition to the King along with the signatures of the 1051 petitioners, which make up the remaining 42 pages. The thrust of the affidavit was that the plaintiff could not have a fair trial by jury in Tonga because of the petition to His Majesty, which alleged, inter alia, that the plaintiff had committed perjury. Reliance was also placed on the adverse publicity contained in the newspaper articles that were alleged, to have been generated by the defendants.

Most of the paragraphs in the affidavit itself simply identify the various exhibits. Of the 38 pages of newspaper articles, only four were in the English language. In the circumstances, it seems to me that the charge made for receiving and perusing the document is clearly excessive. Moreover, I cannot accept that it was either necessary or proper for defendants' counsel to give the document any more than a cursory glance. It should have been obvious at an early stage that the affidavit and its contents were irrelevant to the issue before the Court.

The point of law in contention in the interlocutory hearing depended upon the proper construction of the relevant constitutional and statutory provisions. The petition to His Majesty and the various newspaper articles in the affidavit had no bearing on the Court's decision.

As it was the plaintiff, however, who generated the irrelevant material, I have allowed defendants' counsel a token charge for receiving the affidavit based upon a perusal time of half an hour.

3. The same observations can be made about the numerous other affidavits either received or prepared by defendants' counsel. There is a claim, for example, of $2000 made up of five hours time spent by senior counsel in preparing and executing a four-page affidavit for one of the defendants, Sangster Saulala, which contained 179 pages of annexures. The annexures were newspaper extracts. They were not relevant to the interlocutory motion before the court. I have allowed a nominal charge only simply in recognition, again, of the fact that the issue was first raised in documentation filed by the plaintiff.

4. The fee claimed for preparation of submissions (32 pages), including research and review of cases, totalled $6,600, comprising 16.5 hours at $400 per hour. Obviously, considerable work was put into the preparation of the submissions by senior counsel for the defendants but upon taxation, only time that was reasonably necessary or proper will be recognised and allowed. There is also clear authority, confirmed now in Practice Direction 04/03, that time spent on research will not be allowed unless the legal issues are novel or of unusual complexity. As I have indicated, the interlocutory hearing involved a matter of statutory interpretation. Although I do not downplay the importance of the jury question to the parties, I am not satisfied that the legal issues involved were of such novel or unusual complexity as to warrant an allowance of time spent on research. Making the best assessment I can from the documentation and other information before me, I have allowed a total figure under this head of $1890.

5. A claim is made for various items of correspondence. Counsel appears to have done his best to estimate the actual time spent on each letter but there are still resulting anomalies such as a claim of $100 simply for receiving a letter from opposing counsel setting out available fixture dates. Some of the correspondence referred to has not been made available to the Court.

In New Zealand, the practice that has applied now for a number of years in most of the large legal firms to try and overcome such anomalies is to have individual time sheets drawn up in six minute units. One unit is then allowed for each item of correspondence sent or received. The six minute time period, which I understand was based on the results of research, is supposed to allow counsel time to familiarise themselves with the file in addition to sending or receiving the correspondence. Although not perfect, such an approach in practice does seem to balance out reasonably well for all run-of-the-mill correspondence so as to produce a fair result in the end. I have applied it in the present case as a practical method of determining what was reasonably necessary in the context of this particular head of claim. For each relevant item of correspondence sent or received, therefore, I have allowed $21 in the case of senior counsel and $14 in the case of counsel.

6. A claim is made in the sum of $600 for 1.5 hours spent by senior counsel in drafting an affidavit for one of the defendants, Mr Masao Paasi. At that time, Mr Paasi was a senior law practitioner. He is now a magistrate. Mr Paasi was perfectly capable of drafting his own affidavit and I have, therefore, disallowed the claim.

7. Finally, in relation to costs, a charge is made for preparation of the bill of costs itself. Although the claim, based on 1.25 hours, seems otherwise reasonable, given the end result of this taxation exercise, I am not prepared to allow any costs under this head. The bill itself was clearly excessive and, therefore, not conducive to agreement being reached on costs between counsel. If a more modest and realistic bill had been prepared, based on the recognised principles of taxation, then I apprehend that the matter could well have been resolved by agreement.

9. A disbursement of $123.12 is claimed for photocopying 1026 pages. No vouchers were provided but, in any event, I apprehend that most of the photocopying would have related to the affidavits and exhibits I have referred to which I have ruled were largely irrelevant to the issues I had to determine. I have, therefore, allowed only a modest sum under this head in recognition of what I perceive to be the photocopying that was reasonable necessary for submissions and other relevant documentation.

Conclusions

The end result is that of the total amount claimed by the defendants in the bill of costs before the court, the sum allowed upon taxation, as detailed in the cost schedule annexed to the Certificate of Taxation, is fixed at $4,484.00.

The plaintiff has succeeded in this interlocutory motion and he is, therefore, entitled to an award of costs in his own right, including costs in respect of the Chambers Hearing on 30 September 2004. As was stated in Edwards v Kingdom of Tonga: "It is well settled that a solicitor who conducts his own case and obtains judgment is entitled to the same costs as if he had employed a solicitor except in respect of items which the fact of his acting renders unnecessary." I would add that I found the plaintiff's 38 paragraph Memorandum of Submissions relevant and helpful.

To save the parties facing any prospect of a repeat taxation exercise, I now, pursuant to Order 29 Rule 2, fix the plaintiff's costs entitlement in the sum of $1,250. The plaintiff, therefore, is required to pay to the defendants' counsel the net figure of $3,234.00.

NUKU'ALOFA: 17 NOVEMBER 2004

JUDGE