Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403; (1994) 120 ALR 385; (1994) 68 ALJR 374 (13 April 1994)

HIGH COURT OF AUSTRALIA

CACHIA v HANES AND ANOTHER [1994] HCA 14; (1994) 179 CLR 403
(1994) 120 ALR 385, (1994) 68 ALJR 374
F.C. 94/015
Number of pages - 29

Practice (N.S.W)

HIGH COURT OF AUSTRALIA
MASON CJ(1), BRENNAN(1), DEANE(1), DAWSON(1), TOOHEY(2), GAUDRON(2) AND McHUGH(1) JJ

CATCHWORDS

Practice (N.S.W) - Costs - Taxation - Litigant in person - Compensation for time spent in preparation and conduct of case - Whether entitlement - Supreme Court Act 1970 (N.S.W), ss. 19(1), 76(1) Supreme Court Rules 1970 (N.S.W), Pt 52, r. 23(2).

HEARING

1993, June 16; 1994, April 13
13:4:1994

ORDER

Appeal dismissed.

DECISION

MASON CJ, BRENNAN, DEANE, DAWSON AND McHUGH JJ The respondents
failed in proceedings against the appellant in the Supreme Court of
New South Wales. They unsuccessfully sought orders requiring the
appellant to restore structural support to their land at Castle Hill.
The respondents were legally represented but the appellant was not.
On 7 October 1987 costs were awarded in favour of the appellant
against the respondents. On taxation, a Master disallowed many items
claimed by the appellant in his bill of costs.

2. This appeal is from a judgment of the Court of Appeal of New South
Wales dismissing by a majority (Clarke and Handley JJA.; Kirby P
dissenting) an appeal from the order of the Master on the review of
the taxation of the appellant's costs ((1) Cachia v. Hanes (1991) 23
NSWLR 304.). The grant of special leave, pursuant to which this
appeal is brought, was confined to the disallowance of the appellant's
claim for compensation for the loss of his time spent in the
preparation and conduct of his case and for out of pocket expenses,
being travelling expenses, associated with the preparation and conduct
of his case.

3. The claims for loss of time were quantified in the bill of costs
at $85.00 per hour. This figure was based on the fees charged by the
appellant as a self-employed consulting engineer. However, the taxing
officer found that there was insufficient evidence to show that the
appellant had lost money from his consulting practice in defending the
case.

4. Section 76(1) of the Supreme Court Act 1970 (N.S.W.) ("the Act")
provides:
"Subject to this Act and the rules and subject to any
other Act:
(a) costs shall be in the discretion of the Court;
(b) the Court shall have full power to determine by whom
and to what extent costs are to be paid; and
(c) the Court may order costs to be taxed or otherwise
ascertained on a party and party basis or on any
other basis."
So far as is relevant, s.76(2) defines "costs" to include "costs of
or incidental to proceedings in the Court", although a definition of
"costs" as including "fees, charges, disbursements, expenses and
remuneration" is provided by s.19(1).

5. Under s.122 of the Act, the rules in the Fourth Schedule to the
Act came into operation on the commencement of the Act, subject to and
together with rules made by the Rule Committee. Section 123 provides
that rules may be made by a Rule Committee consisting of the Chief
Justice, certain other judges and representatives of the legal
profession. Section 124 provides that any of the rules in the Fourth
Schedule may be altered, added to or rescinded and any further or
additional rules may be made by the Rule Committee for the purpose of
carrying the Act into effect. Without limiting the generality of
that provision, that purpose includes "(j)... regulating any matters
relating to the costs of proceedings in the Court" and "(k)...
regulating any matters relating to the taxation or other ascertainment
of costs, under the inherent jurisdiction of the Court or under any
Act".

6. Part 52 of the Supreme Court Rules 1970 (N.S.W.) ("the Rules")
deals with costs. Under r.3, the provisions of that Part "apply,
subject to their terms, to and in respect of costs payable or to be
taxed under any order of the Court or under the rules and costs to
be taxed in the Court under any Act". Under r.4(1), the "powers and
discretions of the Court under section 76 of the Act (which relates to
costs generally) shall be exercised subject to and in accordance with"
Pt 52. Rule 23(1) provides that, save for immaterial exceptions,
"costs shall be taxed on a party and party basis". Rule 23(2)
provides:

"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."

It is fundamental to the appellant's argument that the time he lost
in preparing and conducting his case constitutes "costs" within
the meaning of this rule. He is, however, unable to sustain that
proposition. The "costs" provided for in the Rules do not include
time spent by a litigant who is not a lawyer in preparing and
conducting his case. They are confined to money paid or liabilities
incurred for professional legal services. It is only in that sense
that the Rules speak of "costs".

7. Rule 67(1) provides:

"Subject to this rule, the provisions of Schedule G or
of any costs determination, as the case requires, shall
apply to the taxation of costs incurred in relation to
proceedings commenced in the Court after the commencement
of these rules or in respect of business done in any
proceedings in the Court after the Act applies to the
proceedings."

Schedule G, which contains the relevant scale of costs, as in force
when the appellant did the work and now, contains nothing, apart
from its provision for allowances to witnesses, which indicates
that the costs for which it provides are otherwise than costs in
the conventional sense, namely remuneration for work performed by a
solicitor or a solicitor's clerk. Indeed, the clear indications are
that the costs provided for are costs of that kind.

8. Rule 67(2) gives to the taxing officer a discretion to allow costs
in relation to items not mentioned in, or of an amount higher than
that prescribed by, Sched.G. In exercising that discretion he is
required by r.67(3) to have regard to a number of matters:

"(a) the complexity of the item or of the proceedings in
which it arose and the difficulty or novelty of the
questions involved;
(b) the skill, specialised knowledge and responsibility
required of and the time spent and work done by the
solicitor or counsel;
(c) the number and importance of the documents (however
brief) prepared or perused;
(d) the place and circumstances in which the business
involved was transacted;
(e) the importance of the proceedings to the client;
(f) where money or property was involved, its amount or
value;
(g) any other fees and allowances payable to the solicitor
or counsel in respect of other items in the same
proceedings, but only where work done in relation to
those items has reduced the work which would otherwise
have been necessary in relation to the item in
question."

9. Paragraph (g) suggests that r.67(3) was intended to provide an
exhaustive list of matters to which the taxing officer should have
regard ((2) cf. Minister for Aboriginal Affairs v. Peko-Wallsend
Ltd. [1986] HCA 40; (1986) 162 CLR 24 at 39.). At the very least, any other matter
considered by the taxing officer would need to be ejusdem generis
((3) cf. Santos Ltd. v. Saunders (1988) 49 SASR 556 at 563, 570-571.).
The list of factors in r.67(3) assumes that the costs in the taxing
officer's discretion are for work done by a practitioner or
practitioner's employee. Paragraphs (a), (b), (e) and (g) are in their
very terms inapplicable to a litigant in person. The other paragraphs
might be applied to work done by a litigant in person, but there is no
mention of the considerations which might be thought to be central to
the taxation of the costs of a litigant in person such as the nature
of the work done, the time taken to do it, and the skill with which it
was performed.

10. To use the Rules to compensate a litigant in person for time lost
would cut across their clear intent. Costs, within the meaning of
the Rules, are reimbursement for work done or expenses incurred by a
practitioner or practitioner's employee. Compensation for the loss of
time of a litigant in person cannot be said to constitute costs within
the meaning of the Rules.

11. This is hardly surprising. It has not been doubted since 1278,
when the Statute of Gloucester ((4) 6 Edw.I c.1.) introduced the
notion of costs to the common law, that costs are awarded by way of
indemnity (or, more accurately, partial indemnity) for professional
legal costs actually incurred in the conduct of litigation. They were
never intended to be comprehensive compensation for any loss suffered
by a litigant. As Coke observed of the Statute of Gloucester, the
costs which might be awarded to a litigant extended to the legal costs
of the suit, "but not to the costs and expences of his travell and
losse of time" ((5) Coke, Second part of the Institutes of the Laws
of England at 288. See also Howes v. Barber (1852) 18 QB 588 at 592
[1852] EngR 15; (118 ER 222 at 224); Dowdell v. The Australian Royal Mail Co. (1854) 3
El and Bl 902 at 906 [1854] EngR 604; (118 ER 1379 at 1381).).

12. A somewhat anomalous exception was introduced by London Scottish
Benefit Society v. Chorley ((6) (1884) 13 QBD 872.) in which a
solicitor successfully acted for himself in litigation. It was held
that he was entitled to the same costs as if he had employed a
solicitor, except for items such as obtaining instructions or
attendances, which were unnecessary because he was his own client. The
justification given for the privileged position afforded to a solicitor
acting for himself is somewhat dubious, but it serves to emphasise the
general rule. Brett MR put it thus ((7) ibid. at 875.):

"I cannot think that any privilege of a solicitor exists. I
am wholly unable to agree to any argument standing upon that
footing. I should have thought that a person wrongfully
brought into litigation ought to be indemnified against the
expenses to which he is unjustly put; but there cannot be a
perfect indemnity, because it is impossible to determine how
much of the costs is incurred through his own over-anxiety.
When an ordinary party to a suit appears for himself, he is
not indemnified for loss of time; but when he appears by
solicitor, he is entitled to recover for the time expended
by the solicitor in the conduct of the suit. When an
ordinary litigant appears in person, he is paid only for
costs out of pocket. He cannot himself take every step,
and very often employs a solicitor to assist him: the
remuneration to the solicitor is money paid out of pocket.
He has to pay the fees of the court, that is money paid out
of pocket; but for loss of time the law will not indemnify
him. When, however, we come to the case of a solicitor, the
question must be viewed from a different aspect. There are
things which a solicitor can do for himself, but also he can
employ another solicitor to do them for him; and it would be
unadvisable to lay down that he shall not be entitled to
ordinary costs if he appears in person, because in that case
he would always employ another solicitor."

And Bowen LJ, after observing that costs are the creature of statute
and referring to the passage in Coke's Institutes to which we have
referred, said ((8) ibid. at 877.):

"Professional skill and labour are recognised and can be
measured by the law; private expenditure of labour and
trouble by a layman cannot be measured. It depends on the
zeal, the assiduity, or the nervousness of the individual.
Professional skill, when it is bestowed, is accordingly
allowed for in taxing a bill of costs; and it would be
absurd to permit a solicitor to charge for the same work
when it is done by another solicitor, and not to permit him
to charge for it when it is done by his own clerk."

Those assertions that it would be "unadvisable" or "absurd" to refuse
to allow a solicitor who acts for himself "to charge" for the work
done by himself or his clerk ignore the questionable nature of a
situation in which a successful litigant not only receives the
amount of the verdict but actually profits from the conduct of the
litigation.

13. Both the general principle and the exception have been accepted in
this Court. In Guss v. Veenhuizen (No.2) ((9) [1976] HCA 57; (1976) 136 CLR 47.),
Gibbs ACJ, Jacobs and Aickin JJ, after citing London Scottish
Benefit Society v. Chorley and H. Tolputt and Co. Ltd. v. Mole ((10)
(1911) KB 87 and 836.), said of a solicitor who acts for himself
((11) (1976) 136 CLR at 51.):

"Those authorities establish that the litigant in person
does not recover such costs in such circumstances in the
capacity of a solicitor, but because, he happening to be a
solicitor, his costs are able to be quantified by the Court
and its officers."

They went on to cite with approval the passages from the judgments
of Brett MR and Bowen LJ in London Scottish Benefit Society v.
Chorley which we have cited above. It is, however, important to note
that no general submission was advanced in Guss v. Veenhuizen (No.2)
to the effect that a successful solicitor litigant who acts for
himself is never entitled to recover "costs" in respect of his own
time and services. The argument in the case was about whether the
solicitor litigant was precluded from recovering "costs" in respect
of his own time and services in relation to an appeal to this Court
by reason of the fact that he was not on this Court's Register of
Practitioners.

14. If the explanations for allowing the costs of a solicitor acting
for himself are unconvincing, the logical answer may be to abandon
the exception in favour of the general principle rather than the other
way round ((12) Note, in so far as New South Wales is concerned, the
express references to a solicitor acting for himself in Table 2 of
Sched.G from the introduction of Table 2 by an amendment to the
Supreme Court Rules (Gaz.70 of 7 July 1972) until the amendment
of the Table by a Determination of the Legal Fees and Costs
Board (Gaz.49 of 21 May 1993).). However, it is not necessary to go
so far for the purposes of the present case. It suffices to say that
the existence of a limited and questionable exception provides no
proper basis for overturning a general principle which has, as we have
said, never been doubted and which has been affirmed in recent times.

15. Nevertheless, at first instance in Buckland v. Watts ((13) (1970) 1
QB 27.) Donaldson J, whilst feeling constrained by authority to hold
that a litigant in person was not entitled to claim costs for time
spent in preparing his case, expressed the view ((14) ibid. at 29.)
that "the reasoning which supports the reported decisions that
solicitor litigants in person should recover more than their
out-of-pocket expenses seems to me to support a similar decision in
favour of lay litigants in person". The Court of Appeal, on the other
hand, sought to support both the general principle and the exception.
Sir Gordon Willmer said ((15) ibid. at 37-38.):

"What a successful party who has got an order for costs
is entitled to recover falls, as is well known, under two
headings. One heading covers his disbursements; that is to
say, money which he has actually had to pay out to other
people, such as witnesses, counsel, professional advisers
and so forth. The other heading is described as 'costs'.
This is intended to cover remuneration for the exercise of
professional legal skill. ... It is because there has been
an exercise of professional legal skill that a solicitor
conducting his own case successfully is treated differently
from any other successful litigant in person conducting his
own case. We are not concerned with the exercise of other
professional skills. Other professional people, who become
involved in litigation and conduct their own cases, may
recover something in respect of their own professional skill
in so far as they qualify as witnesses and are called as
such. Nobody else, however, except a solicitor, has ever
been held entitled to make any charge, as I understand it,
in respect of the exercise of professional legal skill and
it is this which the appellant has sought to do in the
present case. I have much sympathy for him, as indeed had
Donaldson J, but I can find no ground, either in principle
or on authority, for allowing him anything by way of
remuneration for the exercise of a professional skill which
he has not got."

16. Rather too much emphasis may have been given in the cases to costs
which are awarded to a solicitor acting for himself. They are awarded
upon an exceptional basis and not upon the basis upon which costs are
ordinarily awarded, namely, as an indemnity for legal costs actually
incurred. It is, we think, not possible to reason by way of the
exception that litigants in person are treated unequally and then to
conclude that the very basis upon which costs are ordinarily awarded
should be abandoned so that the exception becomes the rule.

17. Not only is it false reasoning, but it is not a course which is
available having regard, not only to the quite clear case law upon the
subject, but also, more importantly, to the plain import of the Rules
which govern the jurisdiction of the Court to make an order for costs
and any subsequent taxation of costs. Taxation is to take place, not
at large, but "on a party and party basis". Taxation on a party and
party basis is required to be in accordance with the relevant table
in Sched.G and that makes no provision for the reimbursement of a
litigant for time lost in the preparation or presentation of his case.
It does provide for solicitors' costs which have been incurred. That
affords some basis (although insufficient in our respectful view) for
an award of costs in favour of a solicitor acting for himself and so
performing professional duties, but it affords no basis whatsoever
for an award by way of recompense to a litigant for time lost in the
preparation or presentation of his case.

18. Even less do the Rules provide for the substitution of an
antithetical basis for the accepted basis upon which a taxation of
party and party costs is conducted. We speak of antithesis because,
as we have said, the accepted basis for an award of costs is that they
are by way of indemnity. They are intended to reimburse a litigant
for costs actually incurred; they are not intended to compensate for
some other disadvantage or inconvenience suffered by the litigant.

19. If costs were to be awarded otherwise than by way of indemnity,
there would be no logical reason for denying compensation to a
litigant who was represented. That would in some cases dramatically
increase the costs awarded to a successful litigant. In corporate
litigation of complexity, for example, a litigant may expend
considerable time and effort in preparing its case.

20. Whilst the restricted basis upon which party and party costs are
awarded may be debated as a matter of policy, it is to be borne in
mind that party and party costs have never been regarded as a total
indemnity to a successful litigant for costs incurred, let alone total
recompense for work done and time lost. Putting to one side the
question posed by the relatively rare exception of a solicitor acting
in person, there is no inequality involved: all litigants are treated
in the same manner. And if only litigants in person were recompensed
for lost time and trouble, there would be real inequality between
litigants in person and litigants who were represented, many of whom
would have suffered considerable loss of time and trouble in addition
to incurring professional costs. The partial indemnity which the law
allows represents a compromise between the absence of any provision
for costs (which prevails as a matter of policy in some jurisdictions)
and full recompense. In these days of burgeoning costs, the risk of
which is a real disincentive to litigation, the proper compromise is a
matter of both difficulty and concern.

21. That choice has been made in New South Wales at least in the rules
which govern the taxation of costs - rules which are in accordance
with established law. The Rule Committee may or may not be able to
use its statutory powers to change the basis upon which costs are
awarded so that they become, not costs in the accepted sense of the
word, but compensation of a more comprehensive kind. We express no
view upon that. No doubt the Rule Committee, if it had such power,
would wish to inform itself adequately of the reasons for and against
such a change and no doubt it would be able to do so in a way in which
a judge or court cannot.

22. Whilst the right of a litigant to appear in person is fundamental,
it would be disregarding the obvious to fail to recognize that the
presence of litigants in person in increasing numbers is creating a
problem for the courts ((16) The problem is well documented in the
United States: see Mueller, "Abusive pro se Plaintiffs in the Federal
Courts: Proposals for Judicial Control", (1984) 18 Journal of Law
Reform 93 at 101; Rubin, "The Civil Pro Se Litigant v. The Legal
System", (1989) 20 Loyola University Law Journal 999; Gillies,
"Who's Afraid of the Sanction Wolf: Imposing Sanctions on pro
se Litigants", (1989) 11 Cardozo Law Review 173.). It would be mere
pretence to regard the work done by most litigants in person in the
preparation and conduct of their cases as the equivalent of work done
by qualified legal representatives. All too frequently, the burden of
ensuring that the necessary work of a litigant in person is done falls
on the court administration or the court itself. Even so, litigation
involving a litigant in person is usually less efficiently conducted
and tends to be prolonged ((17) See Powles, "Litigant in Person -
Discussion Paper" in Australian Institute of Judicial Administration,
The Litigant in Person, (1993) 7 at 10-11.). The costs of legal
representation for the opposing litigant are increased and the drain
upon court resources is considerable. On the other hand, there is no
doubt that the inability of a litigant in person to obtain recompense
for time spent in the conduct of successful litigation must on
occasions be a significant deterrent to the exercise of his right to
come to court in person ((18) cf. British Columbia, Law Reform
Commission, Report on Civil Procedure: Pt 1 - Costs of Successful
Unassisted Lay Litigants, (1975); South Australia, Law Reform
Committee, Report Relating to the Award of Costs to a Litigant
Appearing in Person, (1974).). We mention these matters not to
express any view, but merely to indicate that there are considerations
which must be weighed before any reasoned conclusion can be reached. A court engaged in litigation between parties, even if it were not
constrained by the legislation and rules, is plainly an inappropriate
body to carry out that exercise or to act upon any conclusion by laying
down the precise nature of any change required.

23. In England, where change was considered desirable, legislation was
thought necessary. Section 1(1) of the Litigants in Person (Costs and
Expenses) Act 1975 (U.K.) provides:

"Where, in any proceedings to which this subsection
applies, any costs of a litigant in person are ordered to be
paid by any other party to the proceedings or in any other
way, there may, subject to rules of court, be allowed on
the taxation or other determination of those costs sums
in respect of any work done, and any expenses and losses
incurred, by the litigant in or in connection with the
proceedings to which the order relates."

And limits have been prescribed by the Rules of the Supreme Court 1965
(U.K.). Order 62, r.18 provides:

"(1) Subject to the provisions of this rule, on any
taxation of the costs of a litigant in person there
may be allowed such costs as would have been allowed
if the work and disbursements to which the costs
relate had been done or made by a solicitor on the
litigant's behalf together with any payments
reasonably made by him for legal advice relating
to the conduct of or the issues raised by the
proceedings.
(2) The amount allowed in respect of any item shall be
such sum as the taxing officer thinks fit but not
exceeding, except in the case of a disbursement,
two-thirds of the sum which in the opinion of the
taxing officer would have been allowed in respect of
that item if the litigant had been represented by a
solicitor.
(3) Where it appears to the taxing officer that the
litigant has not suffered any pecuniary loss in doing
any item of work to which the costs relate, he shall
be allowed in respect of the time reasonably spent by
him on that item not more than 8.25 pounds per hour.
(4) A litigant who is allowed costs in respect of
attending court to conduct his case shall not be
entitled to a witness allowance in addition.
...
(6) For the purpose of this rule a litigant in person does
not include a litigant who is a practising solicitor."

24. We should add that the English legislation and rule represent a
straightforward approach to the problem, in contrast to the approach
adopted in some cases where courts have treated the loss in earnings
of a litigant incurred in the course of the presentation or conduct of
his case as a disbursement ((19) See Kerridge v. Foley, unreported,
Supreme Court of New South Wales in Equity, 19 August 1970; Secretary,
Department of Foreign Affairs and Trade v. Boswell [1992] FCA 629; (1992) 111 ALR 553;
cf. Petrunic v. Barnes [1989] VicRp 81; (1989) VR 927; Australian Blue Metal v.
Hughes (1970) 2 NSWR 119.). Clearly, that is merely an indirect
way of recompensing a litigant for time spent in the preparation or
conduct of his case which, if it is not contemplated by the relevant
legislation or rules, is not permissible. Of course, a litigant who
qualifies as a witness is entitled to the ordinary witness's fees.

25. The disbursements claimed by the appellant and disallowed upon
taxation were, on the one hand, travelling expenses in addition to
a witness's fee for preparation and, on the other hand, travelling
expenses to hear judgment. Either the appellant was entitled to
the witness's fee or he was not; he was not entitled to travelling
expenses in addition to or in lieu of the fee. And since the
appellant was not entitled to any recompense for his appearance in
court to hear judgment, it was, we think, within the discretion of the
Taxing Master to disallow any travelling expenses as an out-of-pocket
expense incurred for that purpose. They were not an out-of-pocket
expense which would have been recoverable by him or his solicitor in
this case had he been legally represented.

26. For these reasons, we think that the appeal should be dismissed.

TOOHEY AND GAUDRON JJ This appeal concerns the costs which the
appellant is entitled to recover from the respondents, consequent upon
an order for costs in his favour made by the Supreme Court of New
South Wales.

2. Questions have arisen as to that entitlement because the
appellant was unrepresented in the Supreme Court. In the Court of
Appeal Kirby P observed ((20) Cachia v. Hanes (1991) 23 NSWLR 304 at
305.):

"Litigants in person are an increasing phenomenon in the
superior courts of this State at this time."

No doubt that observation applies to the other States; certainly it
applies to this Court ((21) See generally, The Litigant in Person,
Australian Institute of Judicial Administration, (1993).).

The litigation

3. The appellant was the defendant in proceedings brought by the
respondents seeking an order that the appellant restore structural
support to their land at Castle Hill. The respondents' claim was
dismissed and costs were awarded against them. The appellant claimed
party and party costs in the sum of $9,415.63; costs were allowed at
$1,179.35. The appellant contested the items disallowed and there
were hearings before the taxing officer and a Master. This Court
is not concerned with the details of all the items claimed because
special leave to appeal was confined "to the claim for costs in
relation to loss of earnings and out of pocket expenses being
travelling expenses". Even as to those items, argument focused on the
entitlement to costs rather than on the actual sums involved.

4. As to the claim for costs in relation to loss of earnings, the
taxing officer identified four categories:
1. Work done in the preparation of the appellant's defence, being

work which would have been done by a solicitor had the appellant
been represented.

2. Attendances by the appellant at court to supervise the conduct of

the case.

3. Work done by the appellant in preparation of the case which is

not of a legal nature and for which an expert in the field would
otherwise have been retained.

4. Attendances by the appellant at court to give evidence as an

expert witness.

5. The appellant, who is a consulting engineer, claimed for loss of
earnings at the rate of $85 an hour, his usual charge for professional
services. As to the disputed claims for travelling expenses, these
related to expenses incurred by the appellant as a litigant in
person because those travelling expenses incurred as an expert witness
were allowed. The expenses were incurred in travelling from the
appellant's home in Carlingford, an outer suburb of Sydney. In
some cases the appellant paid his wife a fee, including travelling
expenses, for tasks such as filing or serving a document but these
claims were allowed and are not the subject of this appeal. The
taxing officer allowed (at a reduced rate) the appellant's claims for
loss of earnings and travelling expenses incurred in his capacity as
an expert witness ((22) Categories 3 and 4 above.). However, those
items claimed for loss of earnings for preparation and conduct of the
case were disallowed in full as were any associated travelling expenses
((23) Categories 1 and 2 above.). That decision was upheld by the
Master and by a majority in the Court of Appeal (Clarke and Handley
JJA., Kirby P dissenting).

6. In the Court of Appeal Handley JA., with whom Clarke JA.
agreed, said ((24) Cachia v. Hanes (1991) 23 NSWLR at 317.) that the
weight of authority compelled him to the conclusion that "fees, charges
... and remuneration" in s.19 of the Supreme Court Act 1970 (N.S.W.)
"refer to remuneration for the exercise of professional legal skill".
This interpretation, his Honour said, "has been settled for centuries"
((25) ibid.). On the other hand, Kirby P, while recognising the
force of the common law approach, said ((26) ibid. at 308.) that "it
is the Rules of the Court, if they apply by their terms, to which the
Court must ultimately return in order to decide the entitlement of a
party to costs".

The legislation

7. In truth any relevant statute or subordinate legislation must be
the starting point for a consideration of the appellant's entitlement
to costs. That is not to say that the interpretation of any statutory
provision or rule of court should be divorced from the historical
context in which it was introduced or from the understanding of the
time. But the ultimate question is one of interpretation.

8. While s.19 of the Supreme Court Act defines costs as including
"fees, charges, disbursements, expenses and remuneration", the source
of the power to award costs is to be found in s.76(1) ((27) The scope
of such a provision was considered in Knight v. F.P Special Assets
Ltd. [1992] HCA 28; (1992) 174 CLR 178.) which provides that:

"(a) costs shall be in the discretion of the Court;
(b) the Court shall have full power to determine by whom
and to what extent costs are to be paid; and
(c) the Court may order costs to be taxed or otherwise
ascertained on a party and party basis or on any other
basis."

Part 52 r.23(2) of the Supreme Court Rules 1970 (N.S.W.) reads:

" On a taxation on a party and party basis ((28) Pt 52 r.23(1)
provides that "Costs shall be taxed on a party and party basis"
except in certain specified circumstances which do not apply in
this case.) 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."

9. The first and most obvious comment to make about these provisions
regarding costs is that they draw no distinction between litigants
who are represented and litigants who are not. Nor was any such
distinction drawn in the Statute of Gloucester ((29) 1278, (U.K.) 6
Edw.I, c.1.) which first accepted in England the rule that a
successful party might recover costs. It did so in language which
related to the real actions referred to in the statute:

" And whereas before Time, Damages were not taxed, but to
the Value of the issues of the Land; ... it is provided,
That the Demandant may recover against the Tenant the Costs
of his Writ purchased, together with Damages abovesaid."

10. Coke ((30) Second part of the Institutes of the Laws of England at
288.) treated the provision as entitling the successful party to all
the costs of the suit other than the "costs and expences of his travell
and losse of time".

The authorities

11. Because of the emphasis placed by Handley JA. and by counsel
for the respondent on what was said to be the settled state of
authority, it is necessary to look at some of the decisions which
have contributed to the situation. So far as the Court of Appeal was
concerned, an earlier judgment of that Court in Cachia v. Isaacs ((31)
Unreported 23 March 1989.) had held that a litigant in person is not
entitled on taxation to recover compensation for time spent in
preparing and conducting the proceedings, other than sums properly
allowable as witness's expenses. In the present case Clarke JA. and
Handley JA. declined to enter into an argument that Cachia v. Isaacs
had been wrongly decided.

12. In Cachia v. Isaacs Samuels JA., with whom Clarke JA. agreed,
said ((32) ibid. at 8.):

" There is a well established line of authority in
England and Australia which establishes the proposition
that a litigant in person, who is not a solicitor, is not
entitled to claim costs in respect of the time expended in
preparing and presenting his or her case, but may recover
only out-of-pocket expenses."

13. The usual starting point in this discussion is London Scottish
Benefit Society v. Chorley ((33) (1884) 12 QBD 452; affd (1884) 13 QBD
872.). It was there held that where an action is brought against a
solicitor who defends it in person and obtains judgment, the solicitor
is entitled on taxation to the same costs as if he had employed a
solicitor, except in respect of items which the fact of his acting
directly renders unnecessary.

14. Because the litigant in that case was a solicitor, the decision
is not directly in point. But it has been argued inferentially that,
had the litigant not been a solicitor, he would not have been entitled
to be indemnified "not merely for the time he must necessarily expend
as a witness in his own case, but also for the pains, trouble, and
skill which he has to incur and to exercise in order to bring it to a
successful conclusion" ((34) (1884) 12 QBD at 455 per Denman J).

15. A decision directly in the respondents' favour is Buckland v.
Watts ((35) (1970) 1 QB 27.). Mr Buckland was awarded the costs of
an action which he had conducted in person. He sought to recover for
the time he had spent looking up the law, preparing documents and
attending court. The Court of Appeal held that he was not entitled to
costs in respect of the time he had spent in preparing his case, but
only his out of pocket expenses. The matter was put this way by
Danckwerts LJ ((36) ibid. at 35.), with whom John Stephenson J and
Sir Gordon Willmer agreed:

"(T)he principle is well settled that though a solicitor who
acts in person for himself can claim to be remunerated
for his professional services in so far as they are not
rendered unnecessary or impossible - as, for instance,
with regard to consultations with himself and that kind of
thing - and such costs are recoverable by the solicitor, in
the case of a layman who is not a skilled legal person he
can only recover his out-of-pocket expenses".

16. In Buckland v. Watts the Court of Appeal took the position of the
litigant in person rather for granted although Chorley had not dealt
directly with that situation. In that regard there is much force in
the comment of the Law Reform Commission of British Columbia ((37)
Report on Civil Procedure, Pt 1 - Costs of Successful Unassisted Lay
Litigants, (1975) at 11.) quoted by Kirby P in Cachia v. Hanes ((38)
(1991) 23 NSWLR at 310.):

"Buckland v. Watts involved a lay litigant in person, with
respect to whose position all the statements in Chorley
were obiter dicta, since Mr Chorley was not a lay litigant.
Moreover, the basic rule, to which the case of the
solicitor-litigant was treated in Chorley as an exception,
was in that case assumed. It was one which, so far as
appears, had never been directly litigated, although it was
no doubt reflected in the practice of the courts. Indeed,
Buckland v. Watts was the first case in which the point had
been squarely presented. Nevertheless, the English Court
of Appeal in the later case somewhat strangely concluded
that it was bound by the earlier decision."

17. Likewise, in Guss v. Veenhuizen (No.2) ((39) [1976] HCA 57; (1976) 136 CLR 47.),
upon which Handley JA. relied, the point at issue was the entitlement
to costs of a solicitor who was a party to litigation and who acted as
solicitor on the record, instructing counsel. Through error his name
was not entered in the Register of Practitioners as required by the
Judiciary Act 1903 (Cth). By majority (Gibbs ACJ, Jacobs and
Aickin JJ, Mason and Murphy JJ dissenting), he was held entitled to
his professional costs. The majority, after referring to Chorley and
other English decisions, said ((40) ibid. at 51.):

"Those authorities establish that the litigant in person
does not recover such costs in such circumstances in the
capacity of a solicitor, but because, he happening to be a
solicitor, his costs are able to be quantified by the Court
and its officers."

But to the extent that that statement identifies the position of an
unrepresented litigant who is not a solicitor, it must be regarded as
obiter dicta since the decision turned primarily on the operation of
the Judiciary Act.

18. Petrunic v. Barnes ((41) [1989] VicRp 81; (1989) VR 927.) is not directly in point.
The parties were represented. What was at issue was a claim by the
successful defendant, a medical practitioner who was sued for
negligence, for costs for the time spent by him instructing counsel or
being in court ready to instruct counsel. The claim was disallowed by
the Taxing Master but, on appeal, was upheld by Murphy J The
relevance of the decision is the primacy Murphy J gave to the language
of the relevant rule of court ((42) O.63 r.69 of the General Rules of
Procedure in Civil Proceedings 1986 (Vict.).) which provided:

"All costs shall be allowed as are necessary and proper for
the attainment of justice or for enforcing or defending the
rights of any party."

His Honour considered various decisions touching the question whether
costs may be allowed to a party other than in his or her capacity as a
witness. Murphy J observed ((43) (1989) VR at 929-930.):

" In my opinion, the appropriate approach that should
be taken by the Taxing Master is to consider whether the
attendance of the party or witness was necessary or proper
for the attainment of justice or for enforcing or defending
the rights of any party.
To approach the matter with a preconception that a
party is not entitled to claim expenses save for time that
he or she spends as a witness ready to give and giving
evidence is not correct."

19. But directly in point is the recent decision of the Federal
Court (Sheppard, Hill and Cooper JJ) in Secretary, Department of
Foreign Affairs and Trade v. Boswell ((44) [1992] FCA 629; (1992) 111 ALR 553.). The
respondent, who was unrepresented, succeeded in an appeal brought by
the appellant against a decision in the respondent's favour. The Full
Court gave the respondent liberty to apply for an order that the
appellant pay her costs of the appeal. She exercised that liberty.
The Full Court's view was that authority dictated that the respondent
might recover out of pocket expenses but not remuneration for work done
in the preparation of her case or for appearing in court to present it.
The Full Court considered that the Federal Court Rules envisaged the
taxation of bills of costs and fees payable to legal practitioners
only ((45) O.62 r.8.). It is apparent that the Full Court had
considerable sympathy for the position of the respondent and that it
did not share the view of Handley JA. in Cachia v. Hanes that any
principle that entitled litigants in person to be remunerated for time
spent in preparing and conducting their own cases would be mischievous
in practice ((46) (1992) 111 ALR at 557.). In the end the Full Court
made a special order that the appellant pay to the respondent "her out
of pocket expenses necessarily and reasonably incurred in relation to
the appeal, such out of pocket expenses to include earnings (if any)
actually lost as a result of the need to prepare her case and to attend
court to present it" ((47) ibid. at 560.).

20. In making this order the Full Court took a broad view of out of
pocket expenses, saying ((48) ibid. at 557.):

"We can find nothing in the cases which obliges this court
to hold that a litigant in person who has had to have time
away from his or her employment or business in order to
prepare a case or to attend court to present it should not
recover an indemnity for any loss of earnings suffered in
consequence. That is not to permit a litigant in person to
charge a sum in the nature of professional costs; rather
it is to provide an appropriate indemnity against loss of
earnings incurred whether in the preparation of a case or
in actual attendance at court. Of course the touchstone
is that of what was necessary and reasonable in all the
circumstances. So long as this is the approach, no
injustice can result."

21. While Clarke JA. had considerable sympathy for the financial
position of the unrepresented litigant who is successful, his Honour
was of the view ((49) (1991) 23 NSWLR at 316.) "that if the law is
to be changed then this must be done by the High Court or by
Parliament" ((50) See the Litigants in Person (Costs and Expenses) Act
1975 (U.K.).). But the law is not so entrenched as these observations
would suggest. Rather, as Kirby P said in the Court of Appeal ((51)
(1991) 23 NSWLR at 311.):

" The principle that a lay litigant in person is not
entitled to costs beyond out of pocket expenses is borne
more of a curious course of judicial presumption rather
than 'a long line of authority'."

The quantification issue

22. Underlying the principle expressed or assumed in the cases is
the difficulty of quantifying the costs, other than out of pocket
expenses, of a litigant in person. Undoubtedly there are difficulties
in quantifying such costs, particularly as there is no scale of costs
directly applicable. In Cachia v. Hanes Handley JA. saw the
difficulty in this way ((52) ibid. at 317.):

"The taxation of costs is ordinarily an accounting
assessment. In the case of litigants in person it could
become the equivalent of a Local Court or District Court
trial."

23. But difficulties of quantification should not obscure any
principle which is reflected in statute or subordinate legislation.
If, as in the case of Pt 52 r.23(2) of the Supreme Court Rules
(N.S.W.), "there shall be allowed all such costs as were necessary
or proper" and if "costs" is defined to include "fees, charges,
disbursements, expenses and remuneration", it is hard to see the
justification for a rule that an unrepresented litigant may recover no
more than out of pocket expenses.

Assessment of costs

24. So far as principle is concerned, the matter is determined in
this case by the Act and the rules of court. Of course the question
arises immediately as to what is meant by necessary and proper costs.
We do not underestimate the difficulties which may arise on taxation.
In that regard it is important that there be some guiding method of
approach. The Law Reform Committee of South Australia thought that
the successful lay litigant should be entitled to reimbursement for
money lost in taking off time from work in the necessary preparation
of a case, "provided however that the total cost involved does not
exceed the alternative expense of employing a solicitor to act in the
matter" ((53) See Twenty-ninth Report, Relating to the Award of Costs
to a Litigant Appearing in Person, (1974) at 5.). The Law Reform
Commission of British Columbia rejected this approach as turning too
much on the employment position of the litigant at the time ((54) See
Report of British Columbia Law Reform Commission, op.cit. at 17-20.).
That body recommended applying the scale of costs applicable to the
litigation and awarding "whatever the tariff allows for those
activities covered by the tariff upon proof that the activities were
actually undertaken" ((55) ibid. at 19.). Kirby P preferred this
approach.

25. Either approach could be accommodated within the principle
expressed in Pt 52 r.23(2) of the Supreme Court Rules that there shall
be allowed "all such costs as were necessary or proper". However,
subject to one qualification, we are persuaded, as was Kirby P, by
the views of the Law Reform Commission of British Columbia. The
qualification is that the total costs awarded should not exceed the
total detriment involved in consequence of the various steps and
actions necessarily and properly involved in the preparation and
conduct of the trial. It will be for the taxing officer to determine
by what means that qualification should be given effect in the
particular case. In this regard, it must be acknowledged, as in the
British Columbia Report, although in a different context ((56) ibid.,
by way of support for its proposal for tariff costs notwithstanding
that a lay litigant may recover more than the detriment which he or she
suffered in the preparation and conduct of the trial.), that
"this is a situation in which purity of principle should give way to
administrative convenience and practicality" ((57) ibid.).

26. As mentioned at the outset of these reasons, this Court is not
concerned with the details of the appellant's claim for costs. It
would seem, however, that the items presently in dispute, can be dealt
with by reference to Sched.G. But, in the end, that must be a matter
for the taxing officer. It is enough for present purposes that the
appeal be allowed and that an order be made as envisaged by Kirby P,
namely ((58) Cachia v. Hanes (1991) 23 NSWLR at 315.):

"Items 1, 3, 5, 9, 10, 11, 12, 13, 16, 18, 20, 21, 22, 23,
27, 29, 31, 33, 35, 37, 40, 42, 44 and 45 to be remitted to
the taxing officer to be assessed in accordance with the
Supreme Court Rules".