Atlas Corporation v Kalyk

[2001] HCATrans 443

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S41 of 2001

B e t w e e n -

ATLAS CORPORATION PTY LIMITED

Applicant

and

FRANCIS GARY KALYK,
ANTHONY JOHN DEEGAN and
BRUCE WILLIAM HANSEN

Respondents

Application for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 20 NOVEMBER 2001, AT 10.38 AM

Copyright in the High Court of Australia

MR L.J. ELLISON:   If the Court pleases, I appear for the applicant.  (instructed by Paul Ward‑Harvey & Co)

MR V.R.W. GRAY:   I appear for the respondent.  (instructed by Francis G. Kalyk)

GLEESON CJ:   Now, you both made the attractive representation that you did not want to address any oral argument, is that right, or have you changed your minds about that?

MR GRAY:   That remains our position, your Honour.

MR ELLISON:   Unless there was something of particular concern to the Bench.

GLEESON CJ:   I am not trying to talk you out of it.

MR ELLISON:   Can I just make one point that is probably clear; or a couple of points?

GLEESON CJ:   That is a risky course.  Yes, go ahead.

MR ELLISON:   Or one point, whether it is clear or not.  Unlike at least the previous case, this one has had no hearing on the merits before anyone.  Whether it is a rule of practice or a rule of law, depending on which appellate judge you look at – it can be either – the Court of Appeal considered itself sufficiently bound by whatever the authority of the High Court in Guss not to entertain the appeal on the merits.

GLEESON CJ:   That raises an interesting question.  What would be the outcome?  What would be the consequence of a successful appeal to this Court?  Suppose we decided that it was time to get rid of the so‑called anomalous distinction.

MR ELLISON:   Your Honour uses the expression “get rid of”. 

GLEESON CJ:   Yes, there are two different ways of getting rid of it.

MR ELLISON:   That can be done in two ways.  You can expand it as some judicial officers say that the exception becomes the rule or you can eliminate it and no one gets their costs.

GLEESON CJ:   But say we did what you want us to do?

MR ELLISON:   Then it would be gone, I respectfully submit, for all purpose.

GLEESON CJ:   Yes, but what would be the outcome of the litigation?

MR ELLISON:   Then so much of the costs assessor’s determination as included profit costs for the solicitor would no longer be included in his certificate of assessment.

GLEESON CJ:   Well, what are you referring to when you talk about “hearing on the merits”?

MR ELLISON:   The Court of Appeal said that the High Court in Guss had laid down or confirmed or affirmed the rule.

GLEESON CJ:   By “hearing on the merits”, you mean a reconsideration of the rule in Guss?

MR ELLISON:   Yes, or the rule in Chorley whether or not it was positively affirmed by Guss.

GLEESON CJ:   Is it the case that the outcome of the litigation depends entirely upon the view that is taken about the rule in Chorley?

MR ELLISON:   Yes.

GLEESON CJ:   There are no factual issues; there are no other issues to be resolved?

MR ELLISON:   It is a very discrete point that has been well trowelled by a number of judicial appellate judges both ways.

GLEESON CJ:   So, if the rule in Chorley goes, Mr Kalyk cannot recover profit costs?

MR ELLISON:   That would be my submission.

GLEESON CJ:   The consequences of that, in terms of what Mr Quickenden decided, would be automatic?

MR ELLISON:   I believe so.  Well, subject to administrative mechanisms, yes.  It was agitated before him.  He, nevertheless, allowed profit costs and an identifiable sum, approximately $15,000, is referable to those profit costs of acting for himself.  Not 33 million.

GLEESON CJ:   Thank you.  Mr Gray, is there anything you wanted to say?

MR GRAY:   The only qualification that I would offer your Honours is that the additional factual background that we submitted included a reference to the fact that the work was done by Mr Kalyk when he was a partner in a subsequent and different firm and that there were charging arrangements made between what I would call the original firm and the new firm.  When your Honour said, if the case were decided, would it solve the matter in a particular way and that there were no factual complications, there would be possibly a question about whether Mr Kalyk’s involvement as a principal in both firms meant that the Chorley exception abrogated the rights of all firms to recover costs or not.  That is a matter that I mention.  That is all, your Honour.

GLEESON CJ:   But what are the consequences of that in terms of the order that we might make?  If we were to grant special leave and then allow the appeal, what would be the consequence?  Would the matter have to go back somewhere for a further hearing?

MR GRAY:   There could be a question that my clients would seek to raise as to whether Mr Kalyk’s membership of what I will call the recovery firm precluded the recovery firm from recovering these costs for the client firm, which was the original firm for which the claim for costs were made.  There has been this transition in partnerships of solicitors.  Mr Kalyk left the original firm that did the work; became a member of a different firm which brought proceedings and there is that question.

GLEESON CJ:   Do the costs that were dealt with by Mr Quickenden include the costs of work done by the previous firm?

MR GRAY:   No.

GLEESON CJ:   Well then, in what circumstances could success of an appeal result in a new trial?

MR GRAY:   It would be the fact that the successful plaintiff who had the order for costs in the first place in his favour, so to speak, was the original firm and the costs that were claimed were costs charged by the second recovery firm, although Mr Kalyk was a member of both firms at the relevant times.

GLEESON CJ:   I am just looking at the draft notice of appeal.  The orders sought appear on page 55.  Do you see those?

MR GRAY:   Yes, your Honour.

GLEESON CJ:   If the appeal were allowed, would it be your contention that orders different from those orders (b), (c), (d) and (e) should be made?

MR GRAY:   Yes, your Honour.  We would seek to contend that the appeal should not be allowed because the costs were incurred by the second recovery firm as distinct from the original litigant firm.

GLEESON CJ:   By “the costs”, you mean the sum of $14,826?

MR GRAY:   Yes.

GLEESON CJ:   What, this would be the subject of a notice of contention, would it?

MR GRAY:   Yes.

GLEESON CJ:   And would the facts, the subject of that notice of contention, be in dispute?  Have they been found?

MR GRAY:   They have not been found.  They were outlined in our summary of argument at page 66, paragraphs 8, 9 and 10.  They were submitted by the appellant to be irrelevant.

GLEESON CJ:   Were they argued before Justice Hulme or the Court of Appeal?

MR GRAY:   It never arose, your Honour.

GLEESON CJ:   When you say, “It never arose”, it would have arisen if a different view of the law had been taken.

MR GRAY:   Yes.

GLEESON CJ:   Is there evidence to support them?

MR GRAY:   There has never been an occasion until this point to put it in as evidence.  Strictly speaking, your Honour, it would have been raised with the assessor because he is the one who is meant to deal with the evidence.

GLEESON CJ:   So, there has been no evidence on these matters either before the assessor or before Justice Hulme or before the Court of Appeal?

MR GRAY:   That is correct, your Honour.

GLEESON CJ:   Well, if you chose to lead no evidence on that fact, how can that be made the basis of a notice of contention?

MR GRAY:   We may have to make a special application in relation to it but when your Honour’s question to me was would the one consequence follow if the appeal were allowed, my response was that we would seek to raise this question.

GLEESON CJ:   The question that has never been raised so far?

MR GRAY:   Yes.

GLEESON CJ:   At any stage of the proceedings?

MR GRAY:   At any stage.

GLEESON CJ:   Yes.

MR ELLISON:   Your Honour, for what is worth, I do not think – as I understand it, the only means of review of the costs assessor’s determination is on a point of law.  The 14,826 figure comes from page 25 of the application book and it is the total of the 10 or 15 pages of amounts claimed by the solicitor.  For what it is worth, the questions of solicitors in partnership and the like are referred to in Dobree v Hoffman, certainly at the end of ‑ that is the Western Australian case which declined to follow Guss, where they talk about if the exception goes, it avoids dubious distinctions, contrived arrangements, the solicitor/litigant receiving a portion.  Accordingly, no profit costs should be allowed to the appellants for work done by their partnership.  It is a matter that has been canvassed.  It was not found to be deserving of any particular exception or condition to the abolition of Chorley.

GLEESON CJ:   Mr Ellison, in the written submissions of your opponent on page 74, paragraph 46, there is reference to a condition.

MR ELLISON:   Yes, your Honour.

GLEESON CJ:   What do you have to say about that?

MR ELLISON:   Your Honour, the applicant is in liquidation.  It has been in liquidation for a long time.  These proceedings and all the antecedent proceedings have been brought with the knowledge and consent – involvement of the liquidator.  Security was granted.  It was, I think, ultimately by consent in the court below.  There is no reason why – I have to say these matters from the Bar table.  There has been long‑running litigation between the two entities.  Costs orders have – I think, criticism

that was made of the respondent in another place was that it has sat on costs certificates or whatever from New South Wales and Papua New Guinea and has not bothered to enforce them against assets that are obviously and clearly in New Guinea.  I referred to in my response the fact that it took a long time for the respondent to pay the District Court of New South Wales costs order.

GLEESON CJ:   Is there any reason why you should not be ordered to provide security for costs, based on the fact that you are an overseas company in liquidation?

MR ELLISON:   Your Honour, the respondent has not done anything about seeking to enforce the judgments it has obtained or the costs order it has obtained.

GLEESON CJ:   What harm do you suffer by providing security for costs?

MR ELLISON:   None, your Honour, but it is the exception rather than the rule and we have always complied diligently with orders and whatever and it is the respondent who has not been that interested in recovering its costs.

GLEESON CJ:   We make no comment upon whether or not the point that Mr Gray foreshadowed in his oral submissions might be available to his client, having regard to the way in which the matter has been conducted so far and the evidence or lack of evidence bearing upon that point.

In this matter there will be a grant of special leave to appeal but the grant will be subject to ‑ ‑ ‑

MR ELLISON:   Could I be so rude, having just interrupted, to tell your Honour that $5,000 was lodged and is still lodged in the New South Wales – well, as part of the New South Wales Court of Appeal proceedings, it is still there.  It can remain there.

GLEESON CJ:   - - - will be subject to an order for security for costs as referred to in paragraph 46 on page 74 of the application book.

Do you need any more specific order than that, Mr Gray?

MR GRAY:   No, your Honour.  If it could just be referred to the Registrar, if necessary.

GLEESON CJ:   Yes.  We will adjourn to reconstitute.

AT 10.54 AM THE MATTER WAS CONCLUDED