Boulton Cleary and Kern v NAD Investments (NQ) Pty Ltd

[1998] QCA 84

IN THE COURT OF APPEAL	[1998] QCA 084
SUPREME COURT OF QUEENSLAND

Appeal No. 9928 of 1997

Brisbane

[Boulton Cleary & Kern v. NAD Investments (NQ) P/L]

BETWEEN:

BOULTON CLEARY & KERN

(Respondent) Appellant

AND:

NAD INVESTMENTS (NQ) PTY LTD

(A.C.N. 010 190 182)

(Applicant)	Respondent
Fitzgerald P. Davies J.A. White J.

Judgment delivered 6 May 1998

Judgment of the Court.

APPEAL DISMISSED, WITH COSTS TO BE TAXED.

CATCHWORDS:	LEGAL PRACTITIONERS - costs - bill of costs - refere nce to taxation - whether bill was a bill of fees charges and disbursements - whether special circumstances were required as a prerequisite to an order for taxation - exercise of judicial discretion to refuse application for order for taxation
Legal Practitioners Act 1995, ss. 8, 13, 16 Re Walsh Halligan Douglas’ Bills of Costs [1990] 1 Qd.R. 288
Counsel:	Mr A.J. Morris Q.C. for the appellant. Mr D.D. Bates for the respondent.
Solicitors:	Jones King, Lawyers for the appellant. McCullough Robertson for the respondent.
Hearing Date:	30April1998

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 9928 of 1997

Brisbane

Before Fitzgerald P.
Davies J.A.
White J.

[Boulton Cleary & Kern v. NAD Investments (NQ) P/L]

BETWEEN:

BOULTON CLEARY & KERN

(Respondent) Appellant

AND:

NAD INVESTMENTS (NQ) PTY LTD

(A.C.N. 010 190 182)

(Applicant) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 6 May 1998

The appellant, a firm of solicitors, has appealed against an order by a Trial Division Judge dated 6

October 1997 that a bill of costs be referred to taxation. The bill relates to work performed by the

appellant for administrators appointed to the respondent company, initially under Part 5.4A of the

Corporations Law on 22 May 1995 and later under a Deed of Company Arrangement which

commenced on 29 September 1995 and terminated on 6 June 1997.

The administrators paid “lump sum” fees and outlays totalling $105,694.73 from the respondent’s funds.

All but $3,243.11 was paid by 19 May 1997. The latter sum was the subject of a “lump sum” account dated 10 June 1997 which was paid on 16 June. The professional fees included in the total of

$105,694.73 amounted to approximately $78,000. The balance consisted of outlays.

Meanwhile, the respondent had sought a review of its administrators’ remuneration, and the

administrators requested the appellant to prepare a detailed bill of costs. An account, which is dated

29 May 1997, was prepared on a “time costing” basis. The “time costing” account totalled

$107,459.86, of which a little more than $80,000 related to professional fees and the balance consisted

of outlays. The administrators sought advice from another firm of solicitors and were advised by a letter

dated 4 June 1997 that they “would be justified in accepting” the “time costing” account. It was after

receipt of that advice that the administrators paid the final “lump sum” account in the amount of

$3,243.11. However, it should be noted that the advice given to the administrators was qualified in that

they were told that “[w]ithout the benefit of perusing [the appellant’s] files it is difficult to come to a

definitive view as to whether the fees charged are fair and reasonable”.

After the administration was completed, the respondent requested the appellant to prepare a bill of costs

in taxable form and that was done on or about 17 July 1997. That bill totalled $121,544.61, including

professional fees of $95,491.90 of which 50 per cent, $46,490.80, was for care and consideration.

Once again, the balance consisted of outlays. It is that bill (the “final bill”) which the Trial Division

Judge ordered be referred to taxation.

The appellant’s argument commenced with a forecast of dire consequences for solicitors, administrators

and businesses if the order appealed from was not set aside. However, it seems preferable to begin by

identifying the source of the power which was exercised by the Trial Division Judge who made the order

under appeal. There were some differences between the appellant’s written outline of argument and its oral submissions. In order to avoid the possibility that some aspect of the appellant’s case might be

overlooked, reference will be made to the widest scope of the appellant’s argument even though some

concessions were made in the course of the hearing.

The appellant’s contention was that the power exercised by the Trial Division Judge was that contained

in s. 16 of the Legal Practitioners Act 1995. Alternatively, it was submitted that the respondent’s

application was made under s. 8, not s. 13, of the Legal Practitioners Act. The former is concerned

with an “application of the party chargeable by such bill”,[1] while the latter is concerned with an

[1]          Legal Practitioners Act, sub-s. 8(1).

application by a “person not the party chargeable with any such bill ... liable to pay ... such bill either

to the attorney ... or to the party chargeable with such bill ...”.[2] The appellant’s argument initially

[2]          Legal Practitioners Act, sub-s. 13(1).

proceeded on the basis that an application under s. 8 was required to be brought within one month,[3]

[3]             Cf. Legal Practitioners Act, sub-s. 7(1).

but that is plainly incorrect. However, sub-s. 8(3) requires “special circumstances to be proved” if such

an application is made “after the expiration of 12 months after such bill shall have been delivered”. That is also applicable to an application under sub-s. 13(1),[4] but, on an application under that sub-section,

[4]          Legal Practitioners Act, sub-ss. 13(1) and (2).

“any additional special circumstances applicable to the person making such application although such

circumstances might not be applicable to the party ... chargeable with the said bill ...” may be taken into

consideration.[5]
If a bill has been paid, an application must be made “within 12 calendar months after payment”,[6] but

[5]          Legal Practitioners Act, sub-s. 13(3).

[6]          Legal Practitioners Act, sub-s. 16(2).

“the special circumstances of the case” must “appear to require” the bill to be referred for taxation.[7]

[7]          Legal Practitioners Act, sub-s. 16(1).

The appellant did not dispute that the “bill” to which reference is made in ss. 8 and 13 is a “bill of ... fees

charges and disbursements”[8] in sufficient detail to enable the person entitled to taxation of the bill to

[8]          Legal Practitioners Act, s. 5.

decide whether to have the bill taxed and to obtain advice for that purpose. Accordingly, it was not

asserted that the application for taxation was made after the expiration of 12 months after a bill was

delivered. However, it was submitted that, although “special circumstances” were not required, there

was a discretion to refuse to refer the final bill to taxation which should have been exercised in the

appellant’s favour. It is convenient to postpone consideration of that question.

The appellant’s primary submissions were that (i) the “bill” to which s. 16 refers is not a “bill of ... fees

charges and disbursements”, (ii) the “time-costing” bill had been paid prior to the request for a bill in taxable form, and (iii) the “special circumstances” therefore made necessary by sub-s. 16(1) of the

Legal Practitioners Act had not been established by the respondent.

The first of those three propositions is contrary to authority[9] and inconsistent with the meaning given to

[9]             See, e.g., Re Walsh Halligan Douglas’ Bill of Costs [1990] 1 Qd.R. 288, 293-294.

“bill” in the other provisions of the Legal Practitioners Act, including ss. 8 and 13. Further, the

appellant’s contention that, if the “bill” referred to in sub-s. 16(1) is a “bill of fees charges and

disbursements” the 12 month limitation prescribed by sub-s. 16(2) may be indefinitely extended

exaggerates the disadvantages of such a construction. The fundamental obstacle to abuse of s. 16 by

a person entitled to apply for an order referring a bill to taxation is to be found in the requirement of

“special circumstances” in sub-s. 16(1). In an appropriate case, the time which has elapsed since an

account, not constituting a bill, was rendered and paid will influence the decision whether the

“circumstances” are sufficiently “special” to warrant an order for taxation under that provision.

The second limb in the appellant’s argument based on s. 16 is factually inaccurate. The administrators

paid the “lump sum” accounts, not the “time costing” account. The appellant did not refer to any

decision to support the proposition that payment of the “lump sum” account was payment of a bill for

the purpose of s. 16.

It follows from what has been said that, in our opinion, “special circumstances” were not a pre-requisite

to the order referring the bill for taxation.
It remains to consider the appellant’s argument that the Trial Division Judge had a discretion to exercise

and that the order should have been refused.

The factors relied on in support of the appellant’s submission that an order for taxation should have been

refused were canvassed at considerable length, but can be briefly summarised.

(i)          Much of the appellant’s work related to activities of directors of the respondent and/or another

company with which they were associated.

(ii) The requirement by the respondent that the appellant’s costs be taxed after the administration

was terminated and the costs had been paid by the administrators involved “[going] behind the back”

of the administrators.

(iii) The administrators had authority on behalf of the respondent to incur and pay the appellant’s

costs under the Corporations Law. No person other than the administrators had authority on behalf of

the respondent while it was under administration. The referral of the appellant’s bill to taxation would

“undermine the independence” of the administrators, which “is inimical” to the Corporations Law.

(iv) Business people seldom seek legal assistance in respect of “complex commercial issues” from

a solicitor in the expectation that the solicitor will only be entitled to taxed costs. “Business people who

need the best available advice, and need it urgently, are willing to pay what might be described as

‘market rates’ for such advice”.

(v)         “The decision under appeal will have a major impact for all administrators (as well as their

solicitors) in dealing with legal issues which may arise in the course of an administration.” If the final bill

was correctly referred to taxation, administrators run the risk of personal liability or “moral obloquy”,

and solicitors “will be reluctant to accept instructions from company administrators”, which “may deprive administrators of the capacity to obtain the best standard of legal advice available, and to obtain

legal advice urgently”.

(vi) Both “principle and policy” therefore make an order that the appellant’s bill of costs be referred

to taxation “inappropriate”.

Individually and collectively, these matters seem of little moment. Some run counter to the evident

policy of Part 2 of the Legal Practitioners Act. Some could also be substantially met by an agreement

made under Part 4 of that Act. In any event, the implication in the appellant’s complaints that a solicitor

cannot be properly remunerated if limited to costs recoverable on taxation faces the obstacle that the

fees claimed by the final bill exceed the fees recoverable under either the “lump sum” or “time costing”

accounts. It follows, of course, that the appellant has only been paid part of what it claims to be entitled

to on taxation.

On the other hand, there are compelling reasons why taxation of the final bill should be ordered.

It does not seem to be disputed that the respondent attempted to lodge the final bill for taxation within

the month permitted by s. 7 of the Legal Practitioners Act. Apparently and for no good reason, the

Registry refused to accept the final bill or to appoint a date for a directions hearing. Had the final bill

been accepted under s. 7 - as it seems it should have been - taxation would have been obtained by the

appellant “as of course and without order of a Judge”.[10]
Secondly, the administrators’ legal advice concerning whether the “time costing” bill was fair and

[10]            Sub-ss. 7(1) and (2).

reasonable was inconclusive.

Thirdly, unchallenged evidence from expert witnesses suggests that the amount charged for care and

consideration in the final bill is excessive.

Fourthly, it is somewhat curious that the outgoings charged in each of the three bills are different.

Finally, the appellant was appointed by the administrators, who paid the appellant by far the greater

proportion of the amount charged by the “lump sum” accounts without any attempt to ascertain whether

the fees and outlays were fair and reasonable. It was only after the respondent applied for a review of

the administrators’ own remuneration that the administrators requested the appellant to prepare a

detailed bill of costs, which resulted in the account prepared on the “time costing” basis. As stated, the

administrators’ legal advice with respect to the “time costing” account was inconclusive. Now, in order

the justify the amount which has been paid, the bill prepared in taxable form must include what at first

sight appears to be a very high amount for care and consideration.

The combination of these factors convinces us that, not only has the appellant failed to demonstrate that

the Trial Division Judge’s discretion miscarried, but it has clearly emerged that his Honour’s conclusion

was correct. Indeed, if the respondent had needed to prove “special circumstances”, that burden would

have been discharged.
The appeal should be dismissed with costs to be taxed.