| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BUNBURY WATER BOARD -v- ERTECH PTY LTD & ORS [2009] WADC 186 CORAM : EATON DCJ HEARD : 6 NOVEMBER 2009 DELIVERED : 4 DECEMBER 2009 FILE NO/S : BUN CIV 51 of 2003 BETWEEN : BUNBURY WATER BOARD Plaintiff
AND
ERTECH PTY LTD (ACN 008 999 353)
Defendant
NYLEX CORPORATION PTY LTD (ACN 084 725 002)
Third Party
BASELL (AUSTRALIA) PTY LTD (ACN 004 327 762)
Fourth Party
Catchwords: Costs - Power of a legally qualified registrar of the District Court of Western Australia to make an order for costs against a solicitor
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Legislation: District Court of Western Australia Act 1969
District Court Rules 2005
Rules of the Supreme Court 1971
Supreme Court Act 1935 Result: A legally qualified registrar of the District Court of Western Australia may exercise power pursuant to O 66 r 5 of the Rules of the Supreme Court 1971
Representation: Counsel:
Plaintiff : No appearance
Defendant : Mr P Mendelow
Third Party : Mr N Ekanayake
Fourth Party : No appearance
Solicitors:
Plaintiff : Not applicable
Defendant : Jackson McDonald
Third Party : DLA Phillips Fox
Fourth Party : Not applicable
Case(s) referred to in judgment(s):
Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd; White Industries (Qld) Pty Ltd v Flower and Hart (a firm) Ltd (1993) 117 ALR 253
Consolidated Byrnes Holdings Ltd &Anor v Hardel Investments Pty Ltd (2009) 176 FCR 348
Knight v F.P. Special Assets Ltd (1992) 174 CLR 178
Latoudis v Casey (1990) 170 CLR 534
Michael v Freehill Hollingdale & Page (1990) 3 WAR 223
Murcia & Associates (a firm) v Grey [2001] WASCA 240
Victoria Legal Aid v County Court of Victoria [2004] VSCA 113
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1 EATON DCJ: This action was commenced by writ filed in this Court at Bunbury on 29 October 2003. The plaintiff sued the defendant and, by statement of claim filed with the writ, claimed damages. The defendant entered an appearance on 7 November 2003. On 13 June 2006 the defendant filed a statement of claim against the third party pursuant to leave to do so granted by a registrar in chambers on 4 May 2006. The defendant claimed an indemnity in respect of the action by the plaintiff or an equitable contribution in the event of it being liable to the plaintiff as an alternative. The third party entered an appearance on 26 June 2006. On 30 October 2006 the third party filed a fourth party notice claiming an indemnity or, in the alternative, a contribution in the event of liability. In due course the fourth party entered an appearance.
2 The matter proceeded through many interlocutory skirmishes. On 10 December 2008 the defendant applied by chamber summons for a listing conference, seeking to have the matter listed for trial. That application was listed as a special appointment before a registrar in chambers on 23 December 2008. On 12 December 2008 the fourth party applied by chamber summons for an order extending the time for the filing and service of further expert reports to 30 June 2009. That application was listed also for hearing at the special appointment on 23 December 2008. 3 It appears that the fourth party, through its solicitors, indicated an inability to attend the hearing on 23 December 2008. The Court requested, in the light of that circumstance, that the parties provide unavailable dates so that the special appointment might be re-listed at a convenient time. 4 On 13 January 2009 the Court advised the parties that the registrar's special appointment had been re-listed on 13 February 2009 and that a special appointment/pre-trial conference had been re-listed on 11 March 2009, each for a day. Certain orders were made on 13 February 2009 including an order that the defendant's summons of 10 December 2008 be set down for a listing conference on 11 March 2009 and that the parties exchange a list of witnesses and their availability on or before 9 March 2009. The special appointment/pre-trial conference was adjourned to 25 March 2009. Each party was directed to appear personally by a solicitor fully instructed on the issues and, other than the plaintiff, by a representative of the relevant insurer with full authority to attempt to affect a resolution of the matter. The question of costs was reserved. (Page 4)
5 The hearing on 25 March 2009 took place before Registrar Kingsley with all parties represented by counsel. Counsel for the third party advised the registrar that she had contacted her instructing solicitors in Melbourne and advised them of the orders compelling their attendance and the attendance of the third party's underwriter. She advised that the underwriter had "pre-existing business commitments involving the managing director from London and also involved all other representatives of the office" which meant, she said, that personal attendance of the underwriter at the hearing was impossible. Given that there was no attendance by her instructing solicitor and by the third party's underwriter she conceded that no progress could be made towards the resolution of the matter and that the hearing was "essentially a wasted morning". All other parties and relevant underwriters were present. 6 Counsel for the plaintiff submitted that, in the circumstances, the third party should be visited with a costs order on an indemnity basis because of the attitude displayed by that party to the Court. Counsel for the defendant sought an order for indemnity costs to be paid forthwith not only with respect to the hearing of 25 March 2009 but also with respect to the hearing of 11 March 2009 given that, on that earlier occasion, the third party was, similarly, not in a position to engage in negotiations with a view to settlement. Counsel for the defendant further submitted that the third party had demonstrated a cavalier attitude and a contumelious disregard for the orders made by the Court. 7 It was the case that the third party was, and had been since 11 February 2009, in administration. In light of that circumstance, counsel for the defendant submitted that it was appropriate that an indemnity costs order should be made against the solicitors for the third party in the absence of any reasonable explanation as to why other business commitments took precedence over that party's obligations to comply with the orders of the Court. 8 Counsel for the fourth party commented that his client had made arrangements to be present despite objections to the listing and reservations about powers to compel. He also submitted that his client's costs should be paid by the third party. 9 Counsel for the third party opposed the application for indemnity costs made by the other three parties. 10 Registrar Kingsley noted that there was a court order and that there had been no attempt, until the very last minute, to vacate the obligations (Page 5)
imposed by that order. It was, he said, a fait accompli that the pre-trial conference be adjourned and that costs should be ordered on an indemnity basis. The question he then posed was as to who should bear the liability for costs. He indicated, having considered the matter, that he was prepared to make an order that the solicitors for the third party, being Wotton Kearney and DLA Phillips Fox, show cause why the costs of the other parties ought not to be paid by them personally. He made an order for costs on an indemnity basis in favour of the plaintiff, the defendant and the fourth party, such costs to include costs of the attendance of respective clients or representatives. Having heard further submissions the registrar confined the costs order to those thrown away by reason of the events of 25 March 2009, ordering that the costs of 11 March be in the cause in all proceedings. He ordered that DLA Phillips Fox and Wotton Kearney show cause why the costs of 25 March 2009 ought not to be paid by them in equal proportions by filing and service of affidavits by 17 April 2009. He directed that the other parties have liberty to file affidavits in response by 8 May 2009. 11 Robin Maurice Shute of Wotton Kearney filed an affidavit sworn 15 April 2009. That firm also filed submissions on 16 April 2009. On 17 April 2009 Gemma Louise Stabler of DLA Phillips Fox filed an affidavit sworn on 17 April 2009 and submissions. 12 The substantive action was set down for a directions hearing on 15 May 2009. That hearing was vacated by agreement, the parties being close to settlement of the matter. On 18 May 2009 the plaintiff filed a minute of orders to be made by consent whereby the plaintiff's action against the defendant was to be dismissed with no order as to the plaintiff's costs. There was agreement that any outstanding costs orders in favour of the plaintiff would be vacated. The third party proceedings were also settled with the filing of a consent order that the third party's claim against the fourth party be dismissed with no order as to costs and that all existing costs orders be vacated. The costs of 25 March 2009 remained a live issue. 13 By letter of 17 August 2009 Registrar Kingsley advised the parties that he had determined that the issue of the jurisdiction of the Court to award costs personally against a solicitor was one that should be referred to a judge pursuant to r 12 of the District Court Rules 2005 and that it should be the subject of a special appointment. Having heard the defendant and the third party at that appointment I have determined that this Court does have the requisite jurisdiction. These are my reasons for doing so. (Page 6)
14 The District Court of Western Australia was created by the District Court of Western Australia Act 1969. Its jurisdiction, both civil and criminal, was that conferred upon it by that Act. The extent of the Court's civil jurisdiction is outlined in s 50. Section 52 provides that in all respects, except as expressly provided for by or under that Act, the practice and procedure of the Court as a court of civil jurisdiction shall be the same as the practice and procedure of the Supreme Court in like matters. Section 53 provides that in all actions, matters and causes within the Court's jurisdiction a judge has, in addition to the powers and authorities conferred by the Act, all the powers and authorities of a judge of the Supreme Court and in all such actions, matters or causes, a registrar who is or has been a legal practitioner has, is deemed to have always had, for the purposes of the Act, in addition to the powers and authorities conferred upon him or her by the Act, all the powers and authorities of the master and the registrar of the Supreme Court. 15 Part IV of the Act deals specifically with costs. Within that part s 64 provides that the costs of any action or proceeding shall be in accordance with any costs determination and shall be paid by or apportioned between the parties in such manner as a District Court judge directs and, in default of such a direction, shall abide the event. Subsection (3) provides that subject to the Act, a District Court judge has the same power in relation to the payment of costs by any party as a judge of the Supreme Court. 16 By s 37 of the Supreme Court Act 1935 the costs of and incidental to all proceedings in the Supreme Court are in the discretion of the Court or judge and the Court or judge shall have full power to determine by whom and to what extent such costs are to be paid. 17 Order 66 of the Rules of the Supreme Court 1971 deals with the question of costs. Order 66 r 5 provides that where, in any proceedings, costs are incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default the Court may make against any solicitor whom it considers to be responsible (whether personally or through a servant or agent) an order directing the solicitor personally to indemnify any party other than his client against costs payable by the party indemnified. Order 66 r 5(2) provides that no order under that rule should be made against a solicitor unless he or she has been given a reasonable opportunity to appear before the Court and show cause why the order should not be made. 18 It is apparent, in the matter before me, that Registrar Kingsley was purporting to, when directing the solicitors for the third party to show (Page 7)
cause, act under the provisions of O 66 r 5 of the Rules of the Supreme Court. 19 Division 5 of Pt II of the District Court of Western Australia Act provides for the appointment of registrars. The functions of a registrar are as set out in the Act and in the rules of court. 20 Division 2 of Pt II of the District Court Rules 2005 provides that a legally qualified registrar may deal with any proceedings that a judge may deal with in chambers other than certain specified areas of law, none of which are pertinent to the matter before me. Registrar Kingsley is a legally qualified registrar. 21 Order 59 of the Rules of the Supreme Court deals with the business to be disposed of in chambers, providing that it shall consist of, inter alia, applications for time to plead, for leave to amend pleadings, for discovery and inspection of documents and generally all applications relating to the conduct of any cause or matter. 22 Section 87 of the District Court of Western Australia Act provides that the practice and procedure of the Court shall be governed by the rules of court and until provision is made by the rules of court or where no special provision is contained in the rules of court the rules of court of the Supreme Court for the time being in force, so far as applicable, apply to the court. It further provides that a reference in any other provision of the Act to rules of court shall, unless the context otherwise requires, be read as including a reference to the Rules of the Supreme Court. 23 The District Court Rules 2005, by r 6, direct that the Rules of the Supreme Court apply to and in respect of any case in the court and, for such purposes, a reference in the Rules of the Supreme Court to "the court" is to be taken as being a reference to the District Court unless the context otherwise requires and a reference in the Rules of the Supreme Court to "these rules" is to be taken as including a reference to the District Court Rules 2005 unless the context otherwise requires. Finally, if there is a conflict or inconsistency between the Rules of the Supreme Court and those of the District Court then the District Court Rules 2005 shall prevail. 24 Under O 60 of the Rules of the Supreme Court dealing with the jurisdiction of masters, a master may do such things, transact such business and exercise such authority and jurisdiction as a judge sitting in chambers may. As mentioned, under s 53 of the District Court of Western Australia Act,a registrar who is or has been a legal practitioner has, (Page 8)
in addition to the powers and authorities conferred upon him or her by the District Court of Western Australia Act, all the powers and authorities of a master and a registrar of the Supreme Court. 25 In this matter the third party contends that the only possible bases for an assertion that the District Court can make an order under O 66 r 5 are sections 55 and 64, respectively, of the District Court of Western Australia Act. That submission ignores s 50 which provides that the court has the same jurisdiction to hear and determine and may exercise all powers and authority that the Supreme Court has and may exercise from time to time in relation to all personal actions where the amount, value or damages sought to be recovered is not more than the jurisdictional limit. No issue is taken with the proposition that, in the matter before me, the damages sought to be recovered are not more than the jurisdictional limit. By s 50(2) the District Court has the same jurisdiction to hear and determine, and may exercise all the powers and authority that the Supreme Court has and may exercise from time to time in relation to all personal actions making a claim for damages in respect of death or bodily injury. 26 The third party's submission with respect to s 55 is to the effect that the words of that section do not appear to refer to or contemplate an order for costs notwithstanding that it confers power in any action or matter within jurisdiction to grant relief, address or remedy or a combination of remedies, either absolute or conditional, and to make any order that could be made in regard to any action or matter in a full and ample manner as ought to be done in the like case of the Supreme Court or a judge thereof. 27 Dealing specifically with s 64 the third party submits, that is it is expressly relevant to the issue of costs and, because it refers to costs to be paid or apportioned between "the parties" and to the payment of costs by "any party", it cannot, therefore, be read to include a reference to a party's legal representative. 28 In Knight v F.P. Special Assets Ltd (1992) 174 CLR 178 the High Court dealt with the question of whether the Supreme Court of Queensland had jurisdiction to make an order for costs against the receivers of companies which were the unsuccessful parties in proceedings, the receivers themselves not being parties to those proceedings. The court considered O 91 r 1 of the Rules of the Supreme Court of Queensland, an order in very similar terms to O 66 r 1 of the Rules of the Supreme Court 1971. (Page 9)
29 In that case Mason CJ and Deane J said (at p 189): "Having regard to the variety and the nature of the circumstances in which an order for costs was made against a person who was not a party according to the record, we cannot accept that there was before the Judicature Acts a general rule that there was no jurisdiction to order costs against a non-party in the strict sense. It is plain enough that the courts from time to time awarded costs against a person who, not being a party on the record, was considered to be 'the real party'. It may be that these cases are capable of being explained on various grounds, including the ground that the non-party ordered to pay costs was guilty of abuse of process, taking a very broad view of what constitutes an abuse of process, but to say that does not deny that there was jurisdiction to make an order for costs against a non-party even if the jurisdiction was exercised in limited circumstances only. Against this background, it is impossible to construe the wide and general words of … O 91 r 1 as delimiting the jurisdiction to order payment of costs as one which was and is confined to parties to the proceedings. The language of the rule is quite inapt to give expression to the complex course of judicial decisions at common law and in equity before the Judicature Acts. Moreover, the extended concept of 'party', including as it does a variety of persons on whom notice of proceedings is served, makes it inappropriate to introduce a limitation which was applied at a time when the concept of 'party' related to a person on the record of the proceedings. It is preferable to interpret the words of the rule according to their natural and ordinary meaning as conferring a grant of jurisdiction to order costs not limited to parties on the record and ensure that the jurisdiction is exercised responsibly." 30 In Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd; White Industries (Qld)Pty Ltd v Flower and Hart (a firm) Ltd (1993) 117 ALR 253 the Federal Court of Australiacomprising Lee, Hill and Cooper JJ considered an application by White Industries that its costs be paid by Flower and Hart, a firm of solicitors, on an indemnity basis. The latter disputed the jurisdiction of the Court to make such an order. The court considered s 43 of the Federal Court of Australia Act 1976 which provided: "Subject to subsection (1A) the court or a judge has jurisdiction to award costs in all (Page 10)
proceedings before the court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded." In that regard the Court said [at p 258]: "There seems no reason to doubt that s 43 confers upon the Court jurisdiction to award costs not only against persons who are parties but also against persons who are not. Clearly the section is no narrower than the provisions of O 91, r 1 of the Rules of the Supreme Court of Queensland considered by the High Court in Knight v F.P. Special Assets Ltd. Those rules were held apposite to permit the Supreme Court to order costs against the appellant as receiver and manager of two insolvent companies responsible for initiating the proceedings and as being the 'real' party to the litigation". 31 The Court went on to say [at p 261]: "Having regard to the provisions of s 43 there is in our view no need to consider whether the 'inherent jurisdiction' of the Court can be called in aid or indeed whether in the case of a statutory court, it is inappropriate to refer to an 'inherent jurisdiction': see Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 618; 71 ALR 457. It suffices to say that s 43 confers in wide terms an expressed jurisdiction to award costs and that the court's powers, in exercise of the jurisdiction, enables a costs order to be made against a third party to the litigation in a suitable case. … Where the court has a statutory power to award costs against non-litigants and it is sought to obtain an order against a solicitor in consequence of his or her conduct in the litigation, it is neither necessary or appropriate to rely upon the jurisdiction of the court over its own officers: see Knight v F.P. Special Assets Ltd per Mason CJ, Deane J at CLR 188. However, this does not deny the existence of the jurisdiction, nor preclude recourse to it in an inappropriate case where the ordinary jurisdiction as to costs is unavailable or inappropriate in the particular circumstances". 32 I referred counsel to Victoria Legal Aid v County Court of Victoria [2004] VSCA 113 where a Judge of the County Court of Victoria had ordered Victoria Legal Aid to pay the costs of a person (the respondent) attending court on a particular day, having been served with a subpoena to do so. Victoria Legal Aid, by originating motion, sought an order in the (Page 11)
nature of certiorari to quash the order of the County Court judge. That application was heard by a judge of the trial division of the Supreme Court and dismissed. Victoria Legal Aid appealed to the Court of Appeal. The principle grounds of appeal were that the County Court judge was functus officio at the time that the order was made and did not, therefore, have the power or jurisdiction to make such an order. In any event, it was contended that the County Court judge had no power to make such an order. In the Court of Appeal Chernov JA found that the County Court judge was not functus officio when he came to deal with the costs matter. 33 Counsel for the appellant, arguing that the County Court judge had no power to make the order complained of, submitted that the respondent was not a party contending that the term "party" denoted a named respondent. Chernov JA concluded that the word "party" in r 63.23 of the Supreme Court (General Civil Procedure) Rules 1996 is not limited to a named litigant in the proceeding but includes someone in the position of the litigant. The relevant rule, he said, essentially reflected the superior court's supervision over practitioners such that it was likely that the rule was intended to reflect the court's power, in appropriate circumstances, to order a practitioner to pay the costs incurred by non-party in relation to a proceeding due to the practitioner's wrongful act. He said (at 19): "First, s 3(1) of the Supreme Court Act defines 'party' as including 'a party to a civil proceeding and every person served with notice thereof or attending on the hearing of the same although not named as a party thereto …' By reason of s 23 of the Interpretation of Legislation Act 1984, and given that there is no basis for saying that there is a 'contrary intention' for the purposes of that section, the word 'party' as used in r 63.23 is to have the same meaning as it has in the parent act, more particularly, as it is defined in s 3(1) of the Supreme Court Act. On that basis, it would follow that the word 'party' in r 63.23 is not limited to a named litigant in the proceeding, but includes someone in the position of the respondent." 34 He went on to say (at 21): "I mention for completeness that the attribution of such a meaning to 'party' in r 62.23(1)(c) accords with the ordinary meaning of that word. Thus, the definition of 'party' in the Shorter Oxford Dictionary includes 'a single person considered in some relation' to another. 'Party' is not limited to a person (Page 12)
who is a litigant, but includes 'a participator' or 'an accessory' or 'an individual concerned'." 35 Chernov JA concluded (at 23): "Thus given my conclusion that 'party' in r 62.23 has the wider meaning, and since s 25 of the Act was plainly modelled on the terms of that rule, I consider that the word 'party' in s 25(1)(c) should be accorded the same meaning as it bears in r 62.23(1)(c). This will include a person in the position of the respondent, which means that the County Court judge had the power to make the costs order against the appellant, provided the other relevant requirements of the subsection were satisfied." 36 The other two members of the court, Warren CJ and Dodds-Streeten AJA agreed with Chernov JA. 37 In ConsolidatedByrnes Holdings Ltd &Anor v Hardel Investments Pty Ltd (2009) 176 FCR 348, a decision handed down on 29 April 2009, Lander J in the Federal Court of Australia dealt with an application by the defendants for the costs of the proceedings. He referred to Knight v F.P. Special Assets Ltd, Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd and s 43 of the Federal Court Act and held that there was no reason to doubt that s 43 conferred upon the Federal Court jurisdiction to award costs not only against the persons who are parties but also against persons who are not, noting that the section is no narrower than the provisions of O 91, r 1 of the Rules of the Supreme Court of Queensland considered by the High Court in Knight v F.P. Special Assets Ltd. Lander J held that solicitors, Simmons and McCartney, had failed as officers of the court to conduct themselves appropriately. He outlined the general circumstances and concluded that, in his opinion, they had failed to prosecute the proceedings for an appropriate purpose and thereafter diligently and appropriately. He ordered that they pay the defendant's costs on an indemnity basis. 38 Section 37 of the Supreme Court Act 1935 confirms that the costs of and incidental to all proceedings in the Supreme Court shall be in the discretion of the Court or judge and the Court or judge shall have full power to determine by whom and to what extent such costs are to be paid. As with s 43 of the Federal Court of Australia Act 1976, O 91 of the Rules of the Supreme Court of Queensland (as they were) and O 66 r 1 of the Rules of the Supreme Court 1971, no reference is made to "parties". (Page 13)
39 The word "party" for the purposes of the District Court of Western Australia Act is defined to include a person served with notice of or attending a proceeding although not named in the record. A legal practitioner appearing for a named party is a person "attending a proceeding". Invariably the legal practitioner is a member of a firm of solicitors which is, as part of the Court's process, named on the record, not as the party but as an entity acting for the party. 40 Having regard to the well established state of the law as to the power of courts to award costs against persons who are not parties but who attend a proceeding on behalf of or in place of a named party and having regard to the broader meaning of that word I conclude that it was not the intention of the legislature to confine the power of the District Court of Western Australia when making orders as to costs to make orders only with respect to the named litigants. To adopt such a conclusion runs contrary to the general intention of s 53 and s 55 of the District Court of Western Australia Act which invests a District Court judge with, in addition to the power and authorities conferred upon him or her by the Act, all the powers and authorities of a judge of the Supreme Court in all actions, matters and causes within jurisdiction and with the power in such matters to grant relief, redress or remedy in full and ample manner as might or ought to be done in the like case by the Supreme Court or a judge thereof. 41 The third party submits that there is no authorisation in s 64(3) of the District Court of Western Australia Act vesting a registrar of the Court with a power to award costs. Section 53, however, clearly provides that, in addition to the powers and authorities conferred upon him by the Act, all powers and authorities of the master and the registrar of the Supreme Court vest in a legally qualified registrar of the District Court. A master of the Supreme Court may exercise power under O 66 r 5 of the Rules of the Supreme Court. It follows, in my view, inexorably, that a registrar, legally qualified, in the District Court of Western Australia is empowered to make orders pursuant to O 66 r 5. 42 Reference has been made in the submissions of both sides to Murcia & Associates (a firm) v Grey [2001] WASCA 240 which came before the court because a judge of the District Court of Western Australia had ordered a firm of solicitors to cease representing or advising a party in a matter before this Court. The Full Court considered a District Court judge's power to grant such an injunction and found that there was no jurisdiction. Steytler J said [at 16]: (Page 14)
"However the supervisory or disciplinary jurisdiction referred to in these cases is that which is part of the inherent jurisdiction of the Supreme Court and it is to the court that solicitors are appointed as officers upon their admission to practice. The District Court does not have a like jurisdiction, although it does have incidental powers which are necessary for the exercise of such jurisdiction as is conferred upon it (see the definition of 'jurisdiction' in s 6 of the District Court of Western Act 1969 and Grassby v The Queen (1989) 168 CLR 1 at 16), and those powers are sufficient, at least, to enable it to correct irregularities in, and frauds upon, its own procedure and rules and to prevent abuses of its process (see Mason v Ryan, above at 340 and Duncan v Lowenthal [1969] VR 180 at 182). It is unnecessary, for present purposes, to explore the full limits of those powers." 43 Steytler J made reference to the District Court of Western Australia having incidental powers necessary for the exercise of its jurisdiction. Such powers would, in my view, include a power to make orders as to costs specifying where the liability to pay costs resides. 44 It has been suggested over the years that the power in the Supreme Court to award costs against a solicitor, being an officer of that court, is derived from the court's inherent powers to supervise, discipline and punish its officers. In my view the making of a costs order against a legal representative of one party in favour of another party is not, in its nature, necessarily a punitive, disciplinary or supervisory function. It is, in my opinion, also incidental to the proper exercise of a discretion to award costs and to appropriately visit liability for the payment of costs. In Latoudis v Casey (1990) 170 CLR 534 McHugh J said [at 3]: "An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v Noumenon Pty Ltd (1988) 47 SASR 182 at p 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus in civil proceedings in order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be (Page 15)
made even though the action has failed through no fault of the unsuccessful party. In Cilli v Abbott [1981] FCA 70; (1981) 53 FLR 108, Keely, Toohey and Fisher JJ pointed out (at p 111) that 'the object of costs is not to penalise; it is to indemnify the successful party in regard to expense to which he has been put by reason of legal proceedings'; see also Anstee v Jennings (1935) VLR 144 at p 148." 45 In circumstances where it is demonstrably the case that a party in litigious proceedings should be indemnified for liability for professional fees and out-of-pocket expenses reasonably incurred by reason of the dilatory behaviour or conduct of the legal representatives of another party and where it would be unfair or unjust to order that that other party bear the obligation to pay costs it is only appropriate that the obligation or liability to pay costs by way of indemnity should fall upon the entity whose conduct gave rise to the expense suffered. Ordinarily, of course, the legal representative acts in accordance with the client's instructions and, in doing so, would bear no liability for the costs of other parties but there clearly can be circumstances where the proper exercise of judicial discretion dictates that the legal representatives of a party on record may be required to bear such a liability. To that extent, the exercise or the discretion to award costs against the legal representative of a party on the record is not, in my view, an exercise of an inherent jurisdiction to supervise, discipline or otherwise punish practitioners but rather the exercise of a discretion incidental to the issue of costs, that issue being a function of everyday litigation. 46 The foregoing should not be taken as a suggestion that the power vested in a court or judge to award costs is other than a creature of statute. Historically the common law courts had only such jurisdiction to award costs as was conferred by statute. The power to award costs both in the Supreme Court and the District Court of this State is a creature of statute and of the rules made pursuant to the Supreme Court Act 1935 and the District Court of Western Australia Act 1969, respectively. 47 I have been referred to the case of Michael v Freehill Hollingdale & Page (1990) 3 WAR 223. In that case the appellant issued a summons pursuant to O 66 r 5 of the Rules of the Supreme Court 1971 returnable before a master in chambers seeking an order that the respondent indemnify him in his involvement in proceedings before the Supreme Court on the basis that the respondent caused costs to be incurred improperly and without reasonable cause. The application was (Page 16)
dismissed at first instance and eventually came before the Full Court. Malcolm CJ observed that (at p 228): "In substance the foundation for the exercise of the jurisdiction under provisions such O 66 r 5(1) is the misconduct of the solicitor." 48 Seaman J (at 234) expressed the view that the application to the court was an application to exercise disciplinary control in a summary way over officers of the court. 49 That case was decided before the decision in Knight v F.P. Special Assets Ltd (supra) in the High Court. There can be no doubt that the Supreme Court does have inherent power to supervise, discipline and punish legal practitioners who are, of course, admitted as officers of that court. Order 66 of the Rules of the Supreme Court deals generally with the question of costs and O 66 r 5 must be seen in that context. It should also be seen in the context of the power of the courts to order costs against a non-party, construing that phrase in its most strict sense. In doing so Mason CJ and Deane J in Knight v F.P. Special Assets Ltd (at p 192) said: "Obviously, the prima facie general principle is that an order for costs is only made against a party to the litigation. As our discussion of the earlier authorities indicates, there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party. Thus, for example, there are several long-established categories of case in which equity recognised that it may be appropriate for such an order to be made." 50 In the same case Dawson J said (at p 202): "The cases therefore establish a long-asserted jurisdiction to award costs in appropriate cases against a person who is not a party to the proceedings where that person is the effective litigant standing behind an actual party or where there has been contempt or abuse of the process of the court. … True it is that in general costs are not awarded against non-parties, but that is because it is generally inappropriate to do so. But I see nothing in the rule to prevent it being done in the exceptional case where it is appropriate to do so. … The wording of O 91 r 1 does not confine the discretion to award costs to the parties to (Page 17)
the proceedings. The circumstances in which it would be appropriate to award costs to a non-party would necessarily be confined, but that is a question of discretion, not jurisdiction." 51 His Honour went on to say that the exercise of jurisdiction in that regard must be carried out in a judicial manner. 52 It is evident from the foregoing that while, there is an inherent jurisdiction to supervise practitioners there has also been and still is a jurisdiction to award costs against entities that are not parties to litigation in the strict sense of that word. Chernov JA in Victoria Legal Aid v County Court of Victoria (supra) found that the word "party" should not be so strictly construed, such that it should include the legal representatives of a party on the record. Clearly, there is a discretion to, in appropriate circumstances, award costs against entities or persons who are not "parties" strictly so called such as, the legal representatives of the party named on the record. In my view O 66 r 5 must be seen in that context also. 53 Finally, counsel for the defendant made it clear that in the event that I decide that Registrar Kingsley, in making the order to show cause, had power to do so I should not attempt to determine the merits of whether a costs order should be made but rather, the matter should be remitted back to the learned registrar for determination, he not being functus officio in respect of the matter of costs. Given my conclusion that the registrar did act within power, in particular that conferred by O 66 r 5 of the Rules of the Supreme Court, I do remit the matter to him for his determination of the merits of the issue of whether and to what extent a costs order should be made.
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